Why Mum­bai Real-estate is Un­af­ford­able

Mum­bai has al­ways been in news for its sale of af­flu­ent prop­er­ties in South Mum­bai to the ever-in­creas­ing af­ford­abil­ity gap for mid­dle class home seek­ers. Re­alty Plus gives an overview of the Max­i­mum city’s re­alty mar­ket.

Realty Plus - - Editor-In-Chief Note -

Mum­bai is a penin­sula bound by the Ara­bian Sea, as a re­sult un­like cir­cu­lar de­vel­op­ment in other cities; Mum­bai de­vel­op­ment has al­ways been uni­di­rec­tional from south to­wards the north­ern suburbs. Fac­tors such as dis­tance from the prime South city cen­tres to the suburbs and lack of ro­bust in­fras­truc­ture con­nect­ing th­ese places, has led to prices surg­ing in the prime city cen­tres and the im­me­di­ate pe­riph­eries. The re­stric­tive govern­ment poli­cies with re­gards to ready reck­oner rates can also be seen as one of the fac­tors re­spon­si­ble for the in­crease in prop­erty prices.

Aniket Haware, manag­ing Di­rec­tor, haware builders ex­plained, “The ready reck­oner rates set by the state gov­ern­ments for each area to cal­cu­late reg­is­tra­tion charges and stamp duty have been grad­u­ally in­creased. This de­ter­mines the low­est value at which prop­erty can be sold. Ma­ha­rash­tra govern­ment has in­creased the ready reck­oner rate by an av­er­age of 7 per­cent.”

Be­sides, the floor space in­dex (FSI) reg­u­la­tions that de­ter­mine the ver­ti­cal length and size of a con­struc­tion as per lo­ca­tion and mu­nic­i­pal­ity haven’t been changed much by MCGM since 1964. Since FSI lim­its stayed static and de­mand con­tin­ued to mount, scarcity has also mounted driv­ing up the prices of prop­erty to higher lev­els.

Giv­ing a pos­i­tive out­look, Ashok mo­hanani, vice Pres­i­dent, NAREDCO West said, “Mum­bai’s De­vel­op­ment Plan 2034 is slated to bring about a lot of pos­i­tive changes to the Mum­bai’s re­alty mar­ket. The DP in­tends to pro­vide ef­fi­cient guid­ance to real-estate de­vel­op­ment with a vari­a­tion in the FSI. By en­hanc­ing the FSI, the plan aims to work on clus­ter re­de­vel­op­ments and re­ha­bil­i­ta­tion of slums. It has given a great sig­nif­i­cance to vari­a­tion in the FSI along with tran­sit-ori­ented den­si­fi­ca­tion and de­vel­op­ment.”

clus­ter re­de­vel­op­ment & slum Re­set­tle­ment

A sig­nif­i­cant size of Mum­bai’s prime land is locked in slums and di­lap­i­dated build­ings. How­ever, at­tempts by the state govern­ment to move the res­i­dents have met with very lim­ited suc­cess due to poor im­ple­men­ta­tion. amit Wad­hwani, Di­rec­tor, sai estate con­sul­tant stated, “The Bom­bay high court’s or­der to va­cate the stay on clus­ter de­vel­op­ment has paved way for the re­de­vel­op­ment of over 50,000 old and de­crepit build­ings in the Mum­bai suburbs. This will pro­vide a large num­ber of af­ford­able hous­ing ten­e­ments. Through clus­ter de­vel­op­ment ap­proach, bet­ter fa­cil­i­ties can be cre­ated for the res­i­dents, thus in­cen­tivis­ing af­ford­able hous­ing. Although, some re­al­tors feel that the slum re­ha­bil­i­ta­tion scheme is a win-for-all sit­u­a­tion in ur­ban cities, oth­ers re­gard it as a govern­ment’s char­ity to the pri­vate de­vel­op­ers. Work­ing with a lot of de­vel­op­ers, I have come to re­al­ize that although the govern­ment has pro­vided an ad­di­tional aid of Rs 1 lakh from its own re­sources, de­vel­op­ers in MMR, where con­struc­tion prices are among the In­dia’s high­est, are du­bi­ous to this op­tion.” Nir­vana Re­alty is one of the de­vel­op­ers that is do­ing a lot of Clus­ter de­vel­op­ment in its projects,wol­ly­wood and City of Mu­sic. Punit agar­wal- ceo Nir­vana Re­alty clar­i­fied, “Clus­ter re­de­vel­op­ment en­ables economies of scale as we of­fer a lot of com­mon ameni­ties for a larger num­ber of flats which re­duces our cost per flat. This makes our projects af­ford­able yet of­fer­ing all the world class

ameni­ties. On the other hand, in slum re­set­tle­ment projects, most of the own­ers are slum res­i­dents. The slum dwellers ei­ther sell their flat or give it on rent as soon as they get pos­ses­sion in or­der to gain profit. Hence, even though SRA projects are work­ing to­wards the govern­ment’s aim of pro­vid­ing hous­ing for all there is yet a lack of author­ity that can over­look the process of house pos­ses­sion.”

the in­fras­truc­ture boost

The pric­ing of real-estate prop­er­ties with bet­ter in­fras­truc­tural com­pe­tences and con­tem­po­rary fa­cil­i­ties are ex­pen­sive than those with­out th­ese. De­vel­op­ment and growth of in­fras­truc­ture is one of the most vi­tal fac­tor in­flu­enc­ing re­alty prices in Mum­bai, But, slow progress of in­fras­truc­ture projects such as the Mum­bai Tran­shar­bour Link (MTHL), Coastal Road Net­work, Navi Mum­bai in­ter­na­tional air­port and var­i­ous phases of the pro­posed Metro links have failed to pro­vide con­nec­tiv­ity to sub­ur­ban de­vel­op­ments and de­con­gest the city. Re­fer­ring to Mum­bai’s in­fras­truc­ture projects, Shailesh Pu­ranik, manag­ing Di­rec­tor, Pu­ranik Builders said, “In­creas­ing good in­fras­truc­ture in the MMR will pro­mote in­vest­ments in the pe­riph­eral ar­eas con­tribut­ing to avail­abil­ity of af­ford­able land parcels and ul­ti­mately eco­nom­i­cal hous­ing.” As vinod ro­hira, manag­ing Di­rec­tor, K. Ra­heja corp aptly puts it, “Af­ford­able hous­ing is di­rectly pro­por­tional to good public trans­port sys­tem and so­cial in­fras­truc­ture de­vel­op­ment. If a mi­cro mar­ket in a far off sub­urb is well con­nected to the city cen­tre and has qual­ity liv­ing ameni­ties, it im­me­di­ately opens up avail­abil­ity of af­ford­able homes where peo­ple would like to move.” amit Ru­parel, Manag­ing Di­rec­tor Ru­parel Re­alty added, “We also be­lieve that the Mum­bai draft plan will help es­tab­lish a frame­work for the city. With the up­dated FSI and Trans­fer of De­vel­op­ment Rights (TDR) it will en­hance the plot po­ten­tial for Mum­bai.”

ad­dress­ing the sit­u­a­tion

Mum­bai has been an at­trac­tive des­ti­na­tion not only for white col­lared pro­fes­sion­als from other cities and un­skilled im­mi­grants from all over the coun­try,but NRIS too want to in­vest in Mum­bai real-estate. This gives af­ford­abil­ity a range of mean­ings for a range of peo­ple. “Af­ford­able hous­ing as a con­cept needs to be clearly de­fined as per the mi­cro mar­ket. Es­sen­tially it is driven by af­ford­abil­ity of a par­tic­u­lar mass or seg­ment of peo­ple in a par­tic­u­lar mi­cro mar­ket,” con­curred Ro­hira.

The sit­u­a­tion of ris­ing in­put costs and govern­ment taxes too is detri­men­tal to af­ford­abil­ity of hous­ing. As Pu­ranik com­mented, “GST, Stamp duty, labour cost, con­struc­tion ma­te­rial prices, all are go­ing up. In fact, if you see in the last three years, there has not been a price rise in the Mum­bai mar­ket in spite of the rise in costs and in­fla­tion.”

For the past decade, Mum­bai was de­prived of 400 acres of mill land for public hous­ing and open spa­ces. Amend­ments to DCR 58 will mean more ac­ces­si­bil­ity to land for af­ford­able hous­ing and public fa­cil­i­ties. “It is es­sen­tial to re­de­velop mill lands in the cen­tre of the city as it will have a great im­pact on Mum­bai’s econ­omy. The Dhar­avi re­de­vel­op­ment too gives hope of an es­tab­lished and com­pre­hen­sive plan,” said Wad­hwani op­ti­misti­cally.

agar­wal puts forth some other points, “Cost and hard­ship for land ac­qui­si­tion are one of the many fac­tors that af­fect the prop­erty prices. Mar­kets are mov­ing slowly so we have to spend a lot of money for mar­ket­ing and con­ver­sion are lower than be­fore. So per sale cost is in­creas­ing con­sis­tently. Mum­bai pro­posed draft de­vel­op­ment plan

2034 is an ex­cel­lent ap­proach to tackle the grow­ing pop­u­la­tion and de­mand of Mum­bai. More FSI and trans­par­ent area cal­cu­la­tions will make projects more vi­able and cus­tomers will en­joy the ben­e­fit of bet­ter prices in the coming times.”

In Mum­bai, due to both nat­u­ral and ar­ti­fi­cial sup­ply con­straints much of the hous­ing de­mand is left un­met. Thus, recla­ma­tion be­comes the only op­tion to in­crease the sup­ply of phys­i­cal land. haware brief­ing on the op­tion said, “The ba­sic scheme for the re­de­vel­op­ment of all the old build­ings jointly, in­stead of re­de­vel­op­ing in­di­vid­ual build­ing will mean or­gan­ised de­vel­op­ment of Mum­bai. The New scheme vi­su­al­izes, that if a de­vel­oper ac­quires the con­sent for 70% of the land, the state govern­ment can in­ter­fere to ob­tain the rest of the land. A min­i­mum car­pet area of the re­de­vel­oped flats will be 300sqft. Build­ings hav­ing an age of more than 30 years qual­ify for clus­ter re­de­vel­op­ment. Clus­ter de­vel­op­ment will be an in­cen­tive to take up th­ese clus­ters in or­der to pro­vide large num­ber of af­ford­able hous­ing.”

With the re­cent amend­ments to thede­vel­op­ment Con­trol Reg­u­la­tions (DCR) 58, the govern­ment stated that one third of the en­tire land would go to the Ma­ha­rash­tra Hous­ing and Area De­vel­op­ment Author­ity (MHADA), one-third would be al­lot­ted for de­vel­op­ing open spa­ces and the re­main­ing would be given to the mill owner for re­de­vel­op­ment.

Ac­cord­ing to Ru­parel, un­der the new struc­ture, this will aid the de­vel­op­ment of af­ford­able hous­ing, which is a boon to builders and cit­i­zens alike and is a wel­come move. Sum­ming up the dis­cus­sion, Mohnani feels, “Govern­ment’s Af­ford­able Hous­ing scheme is a mam­moth as­sign­ment which will re­quire the de­vel­op­ers and realestate agen­cies to take ini­tia­tives and in­tro­duce af­ford­able projects in Mum­bai for the com­mon man.

ashok Mo­hanani

aniket haware

Punit agar­wal

amit wad­hwani

vinod ro­hira

amit ru­parel

shailesh Pu­ranik

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