The reason—early this year, the BMC slashed by half the hefty premiums developers pay to the corporation and state government for additional construction rights.
The deadline is December 31.
The one-year window seems to have stirred Mumbai’s real estate industry, which was hit badly due to the lockdown.
Building industry sources said that in the BandraKhar-Santacruz belt alone, as many as 70 redevelopment proposals have been approved by the BMC’s development plan department.
Redevpt market also on the rebound as pandemic blues begin to wane
Although the department could not confirm the numbers, its chief, Vinod Chitore, said the premium collected from builders because of the 50% concession has been “phenomenal”.
“Between April and September, we collected a record Rs 4,800 crore as premium fees and expect this amount to further increase to Rs 8,500 crore-plus by December,” said Chitore. In comparison, the BMC could manage barely Rs 2,500 crore between April 2020 and March 2021. In 2019-2020, the collection was Rs 3,800 crore.
The redevelopment market too is on the rebound. Till last year, builders were cancelling agreements and surrendering rights to redevelop housing societies in prime localities because of financial unviability. Premiums were high even as property prices fell, forcing builders to step back. However, things have changed now.
In Bandra’s plush Pali Hill, the Daffodils Cooperative Housing Society has been taken over by the Prestige Estates Project for redevelopment. The one-acre plot with 42 apartments built over four decades ago has a development potential of roughly one lakh sq ft. According to Indextap.com, the developer recently bought over 12 apartments in this society for Rs 98 crore.
“On the busy Turner Road (Bandra West), as many as seven buildings have been demolished for redevelopment,” said property consultant Kishore Narang. Among them is the Cassias society being redeveloped by builder Amit Thakker and Moti Mahal, whose owner is redeveloping the strategically located plot.
According to Narang, several of the plots are also being redeveloped into commercial towers because of the high floor space index (FSI) offered by the BMC for office buildings. “On Linking Road and S V Road, between Bandra and Santa Cruz, another four to five properties are being redeveloped as office blocks,” he said.
Thakker said the semi-luxury market has opened up in Mumbai for apartments priced between Rs 5-10 crore. “We see a lot of traction in this market, especially in the Bandra-Khar area,” he said.
Experts said the booming stock market is one of the reasons people are buying properties. “They are booking profits and buying larger homes post-pandemic,” said Narang. Pankaj Kapoor of Liases Foras, a real estate research firm, said while the premium concessions have been a “big motivation”, the dilution of coastal regulation zone norms in Mumbai too will be an added incentive for developers. “Their profit margins have increased because of these concessions, hike in FSI and relaxed CRZ rules,” said Kapoor. “But when supply increases, there will be a glut and pressure on the prices,” he warned.
According to Liases Foras data, Greater Mumbai (area under BMC jurisdiction) has an inventory of 1.10 lakh apartments with quarterly sales of 5,600 units. “The total inventory is 58 months,” said Kapoor. This means it will take almost five years to sell this stock.