Saturday, January 23, 2010

Mumbai builders make a beeline for slum projects

“The reasons are simple. Entry capital is cheaper, cost of clear land is way too steep in Mumbai, and returns are better in such projects,” said Ramesh Jogani, managing director and chief executive (CEO) of Indiareit Fund Advisors Pvt. Ltd, a private equity fund promoted by Piramal Group. Indiareit is close to investing Rs20-30 crore in two slum redevelopment projects in the city.

The Maharashtra government has paced up clearances and slum projects stuck during the economic crisis are being revived. Around 450 slum projects are going on in Mumbai, involving 250,000 homes. The Union and state governments are aiming for a slum-free Mumbai by 2015.

“There is a clutch of new developers who are sending in proposals for slum projects, particularly after the floor space index (FSI) was raised to 3, from 2.5 in such ventures last year,” said S.S. Zhende, CEO of the Slum Rehabilitation Authority (SRA). With higher FSIs, firms get additional construction rights for development.

Zhende also credits the high-power committee formed last year to settle disputes between slum developers and authorities for making the projects more attractive to developers.

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Sunday, January 3, 2010

Ready Reckoner 2010 may hinder redevelopment projects

The state government increased the market value of real estate by 10-20 per cent in its Ready Reckoner 2010.

This is likely to have its rippling effect on redevelopment of old, dilapidated buildings in Mumbai and surrounding Tier II cities, too.

With the upward revision of rates, properties being developed on textile mill land would also see a sharp rise as the ready reckoner raised their value on an average by 13 per cent.

“The increased rates in the ready reckoner will be applicable for land, residential and commercial properties and various premiums charged on additional floor space index (FSI), staircase, etc. This will adversely affect redevelopment of old buildings, chawls and rented houses. There are over 19,000 old and dilapidated buildings in Mumbai alone, in addition to the fresh properties being developed. Same is the story for other Tier II cities,” said a Credai official, requesting not to be quoted.

To read more, please, visit Maharashtra realty to cost more with new ready reckoner

Friday, October 30, 2009

High TDR rates make redevelopment unviable in Pune Real Estate Market

Residents of housing societies who hope to get a new house for old without spending money or without moving from the locality they live in are a disappointed lot as redevelopment of properties using transfer of development rights (TDR) route has stagnated.
Many buildings in the city have been redeveloped in the last decade or so, to exploit the changed floor space index (FSI) norms and TDR entitlements. A resident would get a newly built house of the same area and could also buy extra area at a price much below the market price in the locality. A developer would find the scheme attractive as he would be entitled to sell the entire additional FSI at the going market price.

Credai national vice-president and managing director of city-based Kumar Builders, Lalitkumar Jain, told TOI that TDR rates, currently hovering around Rs 2,700 or higher, make redevelopment projects unviable. "The present rules for adding TDR to the allowable FSI in Pune are so unsuitable that buying TDR and using it for redevelopment projects simply doesn't make sense," said Jain, who is doing many such projects in Mumbai.

Aditya Javdekar, director of Vilas Javdekar & Associates, said the TDR rates move in tandem with land rates. "For some months last year and till middle of this year, TDR rates were sober as realty had suffered a setback. Now they have risen as demand for homes is picking up," he said. Another problem in the redevelopment proposals is the unrealistic demands of the residents, he pointed out.

"The present FSI of .9 in the city's B and C zones can be loaded with TDR to take to 1.6 maximum. The going market prices, coupled with the pressures of residents' demands don't leave any scope for redevelopment," Javdekar added.

An important angle to the TDR tangle is that the process of granting it has stagnated due to some irregularities that came to light some time ago. "Getting a TDR sanctioned and obtaining a certificate can take up to two years now as the authorities have become too cautious," said Rohit Gera, Credai Pune vice-president. This has stagnated TDR supply and jacked up the prices, he added.

A developer said on condition of anonymity that the entire TDR sanctioning process is in the grip of politicians and civic officials who are hand in glove with them. "The decisions to acquire land for development projects are timed to suit the financial interests of these people and they see that too much TDR does not come into the market," he said.

The Times of India