IE: Edgy city embraces redevelopment gold rush: March 24, 2008

TUCKED away near the Eastern Express Highway in Chembur, the placid Suman Nagar so ciety recently struck gold when a developer offered its middle class apartment owners a deal they could not refuse. The residents, mostly retired government officials who currently own flats measuring between 500 sq ft and 1,000 sq ft, were promised flats double that area.

That was not all. In a city where parking slots cost a few lakhs, each resident was assured two enclosed car parking spaces. Besides, they will also throw in a 48-inch plasma TV, washing machine, refrigerator, two air-conditioners, dishwasher, microwave, DVD player and a modular kitchen. The icing will be the corpus amount, something in the range of Rs 7,000 per sq ft of the existing area for each of the 136 families.

For themselves, the developer will build a commercial tower on a part of the 5-acre plot after resettling residents from their threestorey buildings to 16-storey highrises.

With land steadily shrinking in the country’s financial capital, where real estate rates are amongst the world’s highest, redevelopment seems to be where the lucre is for builders. Large real estate players have now started jumping into the fray into what was once a forte of small developers.

“Considering the scarcity of land, redevelopment is not an option anymore but a compulsion,” said Pranay Vakil, chairman of property consultancy firm Knight Frank. Mumbai, he said, is the only city in the country to witness this phenomenon on such a large scale and there would be no stopping them until the government decides to allow construction on salt pan lands or opens up the large reserves of port trust land.

Figures compiled by The Indian Express, with data obtained under the Right To Information Act, show that in the suburbs, especially the prime areas, almost all construction projects in recent years have been redevelopment.

This has meant a change in Mumbai’s cityscape, as buildings ranging between 20 years and 50 years of age on land with an unutilised Floor Space Index (FSI) are being torn down to make way for skyscrapers. With the state government’s recent decision to increase the base FSI in the suburbs from 1 to 1.33, the number of such projects is only expected to soar.

In the western suburbs, where the construction boom is at its frenzied best, of the total 1,554 construction projects over the last three years, 863 are redevelopment projects. In the BandraKhar-Santacruz belt, of the 181 projects sanctioned over the last three years, 152 (83%) are for redevelopment. In other areas in the western suburbs, redevelopment projects range from 60% (Andheri, Goregaon, Malad) to 40% (Borivali, Kandivali, Dahisar) of all construction projects.

In the eastern suburbs, it is Chembur, with its once characteristic bungalows, which is about to witness a rapid change in its skyline. Chembur has already seen the most such projects in the east – 98 over the last three years – and builders are known to be approaching every second society with offers galore.

On the other hand, of the 19,000 dilapidated buildings in the island city – many of which genuinely need to be rebuilt – barely a handful are pulled down every year due to the strict Coastal Regulation Zone (CRZ) and FSI restrictions and congested locations.

For instance, the Fort-Colaba belt, which has the oldest and the most ramshackle buildings in Mumbai, has seen only four redevelopment projects over the last three years despite the area being one of the costliest. However, very soon South Mumbai too is set to see a gold rush by builders as the state’s housing policy draft has proposed a higher FSI for redeveloping building clusters. Developers have already started acquiring rows of tenanted properties and bungalows on Napean Sea road and in Tardeo and Girgaum.

Riding on this redevelopment bonanza are housing societies, especially those on prime plots.

Though fears of a tony upper class moving in to their snug middle class localities, a higher property tax rate and other payments initially hold residents back, they eventually succumb.

In a record of sorts, 35 members of the three-decade-old Prahlad Co-operative Society on Linking Road in Santacruz have been offered a mindboggling Rs 5 core to Rs 7 crore for each flat if they are willing to sell their houses to a developer to construct a commercial complex – money that can easily buy them a comfortable apartment in South Mumbai.

While residents are laughing all their way to the bank, property analysts feel that the magnanimity of developers may just be an indicator of how much more prices are expected to go away from the reach of the middle-classes.

“Mumbai’s property prices do not reflect the subdued sentiments in the rest of India,” said Anuj Puri, chairman of Jones Lang LaSalle Meghraj.

“It is more like cosmopolitan London where prices continue to hold good unlike in the rest of the UK owing to people bringing in money from Russia, the Middle East, Eastern Europe and investing it in property in London.”

Urban planners believe that redevelopment helps in strengthening the infrastructure. For instance, every time a building is redeveloped more land is made available by way of setback for road widening. However, some also feel that the alarming pace at which redevelopment projects are taking off spells dooms for town planning.

“The state needs to put some kind of strict regulation in place,” said RN Sharma, dean of the Tata Institute of Social Sciences in Chembur. “Buildings that are in good condition are brought down rapidly. Like this bungalow right next to our institute that was bought for a handsome amount, demolished and a 20 storey tower is coming up in its place. No one is complaining because the cake is shared by everyone and the cake is large.”

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