Challenges In Land Acquisition For Warehouse And Logistics Parks In India

Land acquisition stands as a pivotal phase in the development of warehouse and logistics parks across India, strategically integrating with national highways, UERs, railways, airports, and industrial corridors. However, navigating the intricate legal landscape surrounding this process presents formidable challenges.

Understanding Regulatory Frameworks:

Navigating the intricate landscape of land acquisition presents a paramount challenge, characterized by the imperative to comprehend and adhere to the multifaceted regulatory frameworks governing the procurement of land for various asset classifications. In accordance with the Indian constitution, matters pertaining to land fall under the purview of the State list, wherein each state establishes its own set of regulations governing land acquisition. Critical to this process is a meticulous assessment of the zoning classification of the land, delineating its designation as agricultural, industrial, or commercial, prior to selecting a suitable location. These regulations exhibit considerable variability, both inter-state and intra-state, encompassing a spectrum of legal considerations including land acquisition statutes, environmental mandates, indigenous rights, and beyond.

Consolidation and Acquisitions:

Acquisition of Land for the industry has always been a major issue in India but, the availability of consolidated land parcels with clear title at a strategic location for the development of the Warehouse and Logistics Parks has become a challenge which in turn has poisoned the growth of the sector. Political, social, and vested interest protests have been happening against land acquisition by many industrialists. Ignorance about land laws and opaque pricing are among other issues which plague the situation.

Further, Litigation due to inherited lands, Fragmented holdings, land ceiling laws, difficulty in obtaining contiguous land touch resettlement and rehabilitation laws etc. makes the due diligence process more cumbersome due to which the land acquisition process proves to be a lot more difficult and time consuming in India. The average acquisition of around 50 acres or more of land in India may take from 10 months to 2 years.

Since the fund houses would always want to purchase the whole land parcel in a single go instead of fragmented registries with individual sets of owners, it becomes impossible to consolidate without a consolidator who consolidates the land parcel in one name and sells / transfers the same to the fund houses.

Cost of land acquisition:

The next major hurdle in the land acquisition is the cost of the acquisition and land prices. The soaring land prices across the prominent locations for warehouses has made it unviable for investment when put together with the construction cost and other factors. The average cost of land acquisition should be anywhere between Rs. 1.25 to 1.5 Crore per acre considering the rental range of Rs. 18/- to 20/- per sq.ft., but, the average price across the suitable regions today is 2 - 3 crores , in turn making it viable especially when the rental values have not been supportive to the said high land prices. The other way, the land cost might be averaged better is that the developers starts acquiring the land parcels by land pooling by the local farmers where all the farmers are ready to sell their land parcel.

Developers' Nightmare

In this whole basket of challenges, weather it is land cost, clean and marketable title, govt sanctions and approvals, constructions cost and finally the achievable rental value, th developers does go through a tough time in finally getting a very average return out the investment made. The said challenge can be solved either by due corrections in the land cost and construction cost or the adequate increase in the rental value could be a relief for the developers/funds.

Conclusion:

Land acquisition for Warehouse and Logistics Parks presents numerous legal, infrastructural challenges, from navigating regulatory frameworks to resolving high cost acquisition and addressing environmental and social concerns. Using Experienced lawyers and doing a detailed due diligence of the property. In order to make land acquisition easier and more beneficial, the Government needs to make more proactive laws for the process of acquisition, as well as for resettlement and rehabilitation. The abolishing of the Urban Land Ceiling Act across the country, and the formulation of laws that encourage participation of the owner in development of land is the need of the hour.

One can avoid bad land deals by using an Expert Real Estate Partner with in depth on ground knowledge who can assure that all land acquired for commercial, industrial, and logistics park development is legally compliant, has a clear title, and is strategically positioned.

XRE is the fastest growing New Age Real Estate Consulting company in India with a diverse combined experience of more than 3 decades and is a distinguished leader in the field of Industrial, Logistics & Warehouse, and Land Services. For more information visit the website www.xreconsultants.com