NHAI to enter into Realty Developments

By Realty Quarter Bureau

State run National Highways Authority of India (NHAI) plans to enter real estate development to leverage the sharp rise in land prices following the construction of expressways and national highways reports Mint.

Till now, private developers were reaping benefits of this land price escalation that resulted from the connectivity provided by NHAI. NHAI will ask state governments to acquire land parcels along with project land, and then either develop it on its own or auction it to raise funds for its ambitious Rs5.97 trillion Bharatmala project, according to the contours of the plan.

This has come in the backdrop of NHAI needing Rs1.5 trillion in the current financial year for highway construction.

“A consultancy firm has been hired to evaluate the idea and prepare a white paper on this under value capture financing under Bharatmala. It has been observed that whenever an expressway or road project is conceived or undertaken, the real estate prices suddenly go up. This time we are trying to capture this on our own, if the state governments agree,” said one of the officials.

A land parcel of 1-2 square kilometres will be sought along the ring roads, while land area totaling 5-6 square kilometres will be sought along the Greenfield expressways.

There will also be a cap on the area where real estate development along the highways or ring roads will be allowed to protect the interests of NHAI and the state governments.

“The white paper will be sent to state governments for consultation before drawing up any concrete plan,” said the first government official quoted above.

Land acquisition has become relatively easy, with the amount of compensation given to farmers being increased. In the last four years, the compensation provided has increased from around Rs90 lakh per hectare to Rs2.80 crore per hectare. NHAI acquired 9,500 hectare of land in the last fiscal.

“We will be very careful. We will seek approvals only after the consultation process is over and state governments are on board,” said the second government official.

Under the Bharatmala programme, close to 34,800km of national highways will be developed. Of this, 9,000km will be economic corridors and 800km expressways—with a majority of them being Greenfield projects.