India, as we know, is one of the fastest developing economies with an ever growing population. One of the major trends in the multi ethnic population of the country is ‘Urbanization’. While, urbanization has brought growth and prosperity to the country it has also led to a mounting pressure on real estate and infrastructure. One of the viable ways to continue the sustainable development is to start expanding the boundaries of cities and including more real estate in its anatomy! One of the major problems encountered in this process is acquiring the land for city’s development as majority of the land owned is under private ownership. This problem can be directly solved by a simple method of ‘land pooling’.
Land pooling is an essential process to initiate the real estate development and real estate cycle of a given location. It is basically a win-win process, in which a central agency (government or private entity) facilitates the development of the region. The land pooling process can be broken down into three simple yet not mutually exclusive steps –
- Firstly, land ownership is transferred from the land owners to the central agency.
- Secondly, the central agency holistically develops the physical and social infrastructure of the region.
- Lastly, the central agency renders re-ownership of the developed region to the original land owners. The central agency keeps a part of the land for itself as public infrastructure or commission for carrying out the development.
Let’s understand this concept with one of India’s first successful land pooling structure i.e. Pune’s iconic Magarpatta City. Vividly spread across an area of 430 acres with approximately 30% green cover , this integrated township and Pune’s Central Business District was once an agricultural land. Just like every real estate development is backed by a local leadership, the exuberant development of Magarpatta City was started by Satish Magar, Managing Director, Magarpatta City.
Magarpatta city was owned collectively by 120 families of farmer community and 800 individuals. The central agency of Magarpatta Township Development and Construction Company Limited (MTDCCL) led the holistic development of this region. Farmers understood and believed in the vision of Magar and contributed their respective land parcels for the development. Afterwards, MTDCCL did a tremendous work in transforming the area right from getting appropriate approvals from different government agencies and conceptualising the entire project keeping in mind all the stakeholders to ultimately designing, planning and constructing the city. The complete makeover of this region had given a major boost to its real estate market and the original owners of the land (which are farmers) are enjoying rental yields from their leased land till date.
One important thing to be learnt from Magarpatta city is the importance of land pooling structure and land owners trust and compliance with the central agency. This model can be very well replicated in other regions of India too. Be it for city expansion, region development or infrastructure development, land pooling is a go-to tool as compared to land acquisition. In land acquisition, the ownership of the land is taken, sometimes in a hostile manner for an exchange of a compensation. This compensation at times are conjectural and tedious in nature. Land pooling provides feasible solution to the traditional pain point of land acquisitions, where people are less reluctant to give up the psychological benefits of owning a tangible asset.