Maharashtra government's proposal to charge builders more for the extra 0.33 floor space index (FSI) given for housing projects is likely to hit redevelopment work in Mumbai's suburbs.
The state government is considering linking the premium to be paid by developers for the 0.33 extra FSI to ready reckoner rates of 2015 as against current base of 2008 rates. The state has increased the ready reckoner rates by an average 15% every year since 2008.
If the proposal is accepted, experts say developers may not find smaller redevelopment projects viable because of the financial outgo, as the base rate for calculation of premium will increase by almost 100%. The move will also push up costs for home buyers in Mumbai's suburbs.
"Is the government realty serious about making homes affordable?" said Rajesh Mehta of Raha Realtors. "Most of the measures announced so far are aimed at boosting the government's revenue, but these, including the latest one, will impact home buyers in terms of prices and lower areas offered to existing owners in redevelopment projects."
In some localities and zones, ready reckoner rates have been revised upward by more than 30-40% every year. In the revision for 2015, rates in popular suburbs such as Goregaon, Borivali, Malad, Chembur, Ghatkopar and Vikhroli have been increased by 30-40%. It is the same for plush residential localities such as Worli and areas near Bandra-Kurla Complex.
"All the equations will change as costing itself will double with this proposal. Redevelopment projects in suburbs like Mulund, Bhandup, Kanjur Marg, Borivali, Kandivali and Dahisar will be hit severely as the cost will move up without much room for recovering it through any price hike," said Nayan Bheda, CMD of Neptune Group.
In a sluggish property market where prices are weakening, a rise in cost for developers is bound to hit their margins.This is expected to see less number of developers coming forward for smaller redevelopment projects in the suburbs.
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MCHI-THANE has always been very clear that fine housing complexes and shopping malls cannot stand in isolation. A great City is the sum total of great buildings, great infrastructure and great people. MCHI has been committed to growth of the real estate sector and is credited with the harmonious growth and rise in quality and standards of construction in Thane City in the past decade.
Its aim as an Association of Developers has been to seek rational rules and regulations which are uniformly applied across the board as this will to a great extent result in speedy construction, cost reduction, fair pricing and a push for better quality standards at par with the developed world, with a high level of transparency.
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