Mr. Ramesh Nair, JLL India
In
a landmark move that will have wide-ranging implications for commercial real
estate in India, the Government has done away with the mandatory requirement of
10 hectares of minimum land area for setting up a IT / ITES SEZ. (Special
Economic Zone)
With
immediate effect, the minimum built-up area requirements to be met by SEZ
developers will be 1.00,000 square meters for the 7 major cities, 50,000 square
meters for Category B cities and only 25,000 square meters for the remaining
cities.
The
first and most encouraging impact of these amendments to the previous
requirements, which were a major hurdle, is that many more IT companies will
now be able to launch their own SEZs.
Previously,
only the largest IT players could have their own IT SEZ’s given the capital
required to buy 25 acres land.
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| Ramesh Nair, MD (West), Jones Lang Laslle India |
Developers
will now be able to aggregate smaller contiguous land parcels and turn them
into SEZs. In cities like Chennai and Bangalore (where the FSI for IT Parks is
as high as 3.25 to 3.75, an SEZ
development can now be developed on a land parcel as small as 7 acres.)
Further,
some IT SEZ developers who have already met the 1,00,000 square meter built-up
area criteria will now convert the balance land for residential use, giving the
mixed-use edge while also making the formation of many more walk-to-work
residential projects possible.
Real
estate developers will now be able to divide up their land holdings and
allocate smaller parts to IT companies to construct their own IT SEZs.
Another
extremely important result of this ruling is that it will now become easier to
exit from SEZs given that transfer of ownership of SEZ units - including sale -
has now been allowed.
Moreover,
Real Estate Private Equity Funds with foreign capital will now be able to do
more smaller deals, and this is bound to bring in more FDI into the sector.
The
infusion of FDI into the real estate markets of smaller cities can also become
a critical factor in IT / ITES companies deciding to move into these cities -
with an obvious positive impact on their local economies and therefore the
growth of their real estate markets across all segments.
About
the Author...!
Mr.
Ramesh Nair is Managing Director (West) at Jones Lang LaSalle India
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