The repeal, done after months of delay and debate, could free up as much as 500 hectares (1,234 acres) of land available for development, Chief Minister Vilasrao Deshmukh said.
While the state is expected to get nearly Rs 11,000 crore (Rs 110 billion) from the Centre under the Jawaharlal Nehru National Urban Renewal Mission after the repeal of the Act, today's move is expected to boost middle- and low-income housing in the eastern suburbs of the city and cool prices in these areas over the next three to five years.
The ULCRA was applicable in eight cities of the state - Mumbai, Thane, Pune, Nasik, Nagpur, Sangli, Solapur and Kolhapur - and stipulated that an individual cannot hold more than 500 square metres of vacant land in Mumbai and 1,000 sq metres in other cities such as Nagpur.
The state government would take over the remaining land and use it for mass housing. However, the state government could acquire only 1,000 acres of land under the Act.
Deshmukh said the new supply of land is expected to have a sobering effect on property prices in Mumbai's suburbs such as Vikhroli, Mulund, Kanjurmarg, Thane and others.
Though industry-watchers believe that the ULCRA repeal will not see prices fall immediately, the new supply will ensure that prices stabilise.
"In areas such as Mulund where prices have gone up from Rs 2,500 to Rs 9,000, prices will stabilise," said Ramashraya Yadav, head of finance, Orbit Corporation, a Mumbai-based developer.
Prices in prime areas such as Nariman Point or Bandra will not be impacted but the ULCRA repeal will see a housing revolution in the state.
"We will see at least ten times more mass housing projects in some of the Mumbai suburbs, Kalyan, Pune, Nasik, Sangli and Kolhapur in the next three years," said Anuj Puri, chairman of property consultant Jones Lang LaSalle Meghraj.
Developers also feel they can save significantly on the money spent on getting permission under ULCRA for land development.
"Most developers spend Rs 100 per square foot on getting permission from the ULC department. Now we can save that cost and pass on the benefit to consumers," a Mumbai-based developer said.
