The Maharashtra government’s latest proposal to allow the commercial capital’s buildings to expand vertically, is likely to spur some development activity in the city but won’t result in a significant enough spurt in available realty and dent prices in the long run.
With an eye on increasing housing stock in the island city, the government on Tuesday proposed modifications to the existing Development Control Regulations (DCR), whereby developers would get an additional 0.5 Floor Space Index (FSI).
With this, the total FSI can increase to a maximum of 2.5 with Transfer and Development Rights (TDR), if a property is located beside a 30 meters wide road. As per the proposal, the narrow the road, the less the FSI would available to a property.
The government has sought suggestions and objections to this proposal within a month after which it may be formulated as a policy. Currently developers avail 1.33 FSI and with the additional 0.5 FSI, it would go up to 1.83. Builders are also allowed to buy TDR to build high rises.
“Overall, the increase in FSI is definitely a positive sign and implies that developers active in Mumbai could go a little more vertical. However, considering that the Island City is saturated and new developments come only in the form of redevelopments, a marginal increase will not show a very significant impact,” said Anarock Property Consultants chairman Anju Puri.
For prospective home buyers, there’s little hope of any moderation in real estate prices from the marginal rise in FSI.
Manju Yajnik, vice chairman, Nahar Group of Developers said, “Additional FSI alone can not bring down prices. Several other factors go into building apartments. So if you are looking at significant reduction in prices, then the government should look at this sector with a holistic approach.”
Developers said tax burden has also increased the final prices for home buyers and that need to be looked into. “The approval cost also needs to be brought down,” a developer said.
Niranjan Hiranandani, CMD, Hiranandani Communities and President, National Real Estate Development Council said, “This additional 0.5 FSI will be charged a premium by the government. The premium will be 60% of the ready reckoner rate of that locality.”
According to Mr. Puri, massive infrastructure upgrades are the need of the hour for Mumbai and must accompany such FSI hikes.
“Mumbaikars have been facing traffic jams on a daily basis for a long time. If FSI increases are not aptly supported by infrastructure upgrades in the form of Metro rails, monorails and freeways the city will collapse under the burgeoning population,” he said.
Mr. Hiranandani said that the 0.5 hike in FSI will not impact supply in the immediate context. “Consider that the new building plans (with the additional FSI) would take about a year to commence work, the project itself taking another three to four years to result in fresh supply coming in the market.”
Calling for a sharper increase in the FSI in one go, Mr. Hiranandani said: “By doing marginal increases from time to time, the infrastructure development is not commensurately increased and so what happens is you increase the burden on the city.”
