URBAN REDEVELOPMENT IN MUMBAI

FPJ BureauUpdated: Sunday, June 02, 2019, 08:59 AM IST
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A t its most fundamental, urban redevelopment is all about revitalizing congested city interiors. Redevelopment gains prominence in a scenario where conventional development activity is still subdued by various economic and market dynamics. For i

nstance, in Mumbai, the increased FSI granted for the redevelopment of ailing buildings may conceivably encourage certain developers to come up with innovative ways to derive optimum benefit.

Most major Indian cities with established real estate markets have pockets that lend themselves suitably to redevelopment.

These include Chennai, Hyderabad, Bangalore and Delhi, apart from established smaller towns and cities. The old areas of any city usually present considerable potential for redevelopment.

THE BOTTOM- LINE FOR DEVELOPERS

Redevelopment makes business sense because the demand is considerable and returns not insignificant. Builders undertake to redevelop dilapidated buildings via strategic tie- ups – at their own cost, and in the legal capacity of the constituent attorneys.

There are various advantages, including the acquisition of additional flats thanks to greater FSI, and reduced stamp duty.

Most redevelopments feature additional floors thanks to greater FSI, and the builder retains a certain number of the added flats.

Since the value of a redeveloped building is much higher than the original, the builder makes a profit on the sale of these flats and also shares in the benefits of lower stamp

duty than would be applicable in greenfield projects.

While redevelopment does generate various opportunities for both developers and buyers, there are drawbacks. In the case of Mumbai, increased redevelopment sparked off by the additional FSI granted to such projects will present immense challenges on the cityalt39s already compromised infrastructure.

It would have been prudent to include a clause that requires developers undertaking such redevelopment to enhance the surrounding infrastructure as well, and to offer further incentives in that regards.

The option to redevelop certain buildings makes sense to anyone who can meet the prescribed requirements. All major developers such as DLF, Unitech, Omaxe, Raheja, Ansals, Akruti Nirman and Paravsnath are involved in redevelopment to some extent.

In light of the considerable need for redevelopment activity in the more congested areas of some of our larger cities, the negative aspects that hitherto haunted this segment are finally being addressed. For instance, the Mumbai High Court recently passed a judgment that firmly protects the rights of all individual stakeholders in a building earmarked for redevelopment.

SLUM REDEVELOPMENT

Slums represent a stumbling block in organized urbanization, since they occupy major tracts of land at minimum possible optimization.

Moreover, they detract from the overall quality of life – both of the slum dwellers and those living in the vicinity. By relocating slum dwellers and developing the land they occupy, this land can be put to much better use and add to the cityalt39s quality quotient. Redeveloped slums result in improved property demand within and around the said areas. Large parcels of land openup for proper development, thereby adding to supply in congested areas and exerting downward pressure on existing property rates. Moreover, demand increases because the areaalt39s profile is given an upgrade.

A case in point would be the Dharavi redevelopment project in Mumbai. Dharavi falls in a prime locality between BKC and the Lower Parel mill district. In other words, projects there will naturally cater to highend highend property buyers. With the applicable FSI there, there will be enough left for luxury housing projects after rehabilitation of existing hutments. With an FSI of 4 instead of the usual SRA ceiling of 2.5, the Rs. 9250 crore Dharavi redevelopment project has immense potential. This said, it is high time that this project be put on the fast track in al

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