Let’s analyse the latest judgement of additional FSI on redevelopment in south Mumbai regions on private, tenanted (pagdi) and cessed land and its impact. Also the benefits of the latest ruling on MMRDA plots in Oshiwara and other locations getting state cabinet approval of FSI of four.
Let's begin with understanding the meaning of ‘Cess’ or ‘cessed land’ for a layman. Cess is a charge or rent/lease. ‘Cessed Land’ in our case is leased land. In south Mumbai region the government, collector and the Bombay Port Trust (BPT) have huge number of land parcels leased along the coastal line and other regions. Except for BPT most would be considered permanent lease. We all are/were well aware about the possibilities of such properties coming into the market for development or redevelopment, but the impact of the same is unknown.
In the past, I have mentioned the need to create a balance in the city. Until now it seemed that only North of Bandra is where all the development via TDR (Transfer of Development Rights) or redevelopment was and is happening, which created a huge population imbalance between south and north of the city. Imbalance brings all sorts of issues, like traffic and parking, water, drainage and various infrastructure challenges.
I look at this judgement and MMRDA getting approval as a very positive move towards bettering quality and standard of living. A well planned development will not only give a deserved facelift but will create a more sustainable and hygienic living environment for the current occupants besides offering more abode seekers options in their preferred location.
Most buildings in Kalbadevi, Charni Road, Byculla, Grant Road, Mumbai Central and central suburbs comprise dilapidated two to five storey buildings and chawls with no lifts, unhygienic common toilets on floors with almost 10 to 14 units (size 200 to 400 sq.ft.) on each floor, with each unit housing four to six members. These buildings are more than 50 to 70 years old and were perhaps designed to handle half or less the population. None have parking facilities and are fire hazardous.
Let’s take Kalbadevi, for example, and within that location a five kilometre radius and assume there are 150 old buildings. What I am suggesting is, don’t develop all plots. Strategically plan layouts of each zone and, let 10 to 15% of the landlords or owners sell their ENTIRE FSI (call it TDR or sale of FSI) thereby creating open space for various infrastructure related needs. Such FSI is to be used only in new or redevelopment projects only. Under the current scenario one building is almost stuck to the other and later I see nothing different happening other than seeing fancier looking buildings stuck to each other.
With increase in FSI the monetary demand by current tenants for their units will increase too. I think it would be fair to compensate them by giving additional space. Buying them out would be a painful option or task for the developer since each tenant or occupant has their own reasoning and demand. The fairest medium of additional space is a win-win for both. If the occupant thinks his property is worth a certain premium let him recover the same by selling the property or additional space that he gains. I am sure a detailed work structure can be prepared. Unreasonable demands by occupants will delay the process but it is important for both parties be fair in order to reach an agreement.
The good news with increase is FSI in south Mumbai and on MMRDA land in other locations than BKC is the possibility of getting Foreign Direct Investment (FDI) which has not been able to gain entry into this city due to FDI restrictions. Now foreign developers have an opportunity to independently or jointly with local developer look at the options. None of this means that they are foolish and would pay occupants a fancy price of their desire. Their feasibility and valuation reports are more stringent than any local developer. A local developer works on his ‘gut - feel’ and is a fast decision- maker. Having said that, some fly-by-night developers have gone bust recently. So my advice to sellers or occupants would be go with a stronger and a reputed developer versus someone who is willing to offer more today, to avoid being a net loser due to the delays and hurdles in the project completion. I am not saying unforeseen delays do not occur with the most reputed developers, but the safety net and assurance of a quality finished product is far more rewarding for the patience one has to maintain.
To answer the internal question: Will this impact the property prices?
What one needs to ask is, impact who? Yes it will have an impact on selling current unit prices; they will go up (Sellers will benefit). Buyers don’t have much to cheer for as they will still pay a total of: acquisition and construction cost in addition to developer’s profit. However, additional supply in times to come may add affordable housing and will stabilise prices. Although, it is too early to predict anything since the supply and its delivery is uncertain. It could be a good five years till you see anything ready. The location spread is huge and, the demand could be scattered. However, premium locations will have no impact but it will allow nuclear families who are struggling to find homes within their limited budgets to find suitable options in times to come. |