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Monday, 10 Sep 2012
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Redevelopment is the next BIG THING
Sugee Group_ProjectsToday

 

Overview

 

The Indian Realty business is now transitioning from the regular horizontal construction methodology by going vertical; hence redevelopment is the next big thing in Mumbai.

 

Mumbai is known to be one of the most expensive locations for property and property rates are appreciating day-by-day. Also, the availability of open plot is scarce; hence builders today are looking at redevelopment of housing societies so that they can unlock potential of unused FSI. With limited availability of open land parcels in the city, major developers are now looking at venturing into the redevelopment space.

 

Redevelopment has become quite popular as it is the most practical, economical and long term solution, in a scenario where old structures are proving to be superseded. It is a win-win situation for both the parties but also there are a lot of hassles and stringent procedures which need to be followed.

 

Redevelopment and Constraints

 

Due to scarce availability of unoccupied land, growth in Real estate, particularly in terms of fresh supply is largely dependent on redevelopment activities. As a result, slum redevelopment schemes as well as redevelopment of old cessedbuildings is playing a key role in Realty development in Mumbai. Redevelopment projects are also seen as potential source of maintaining buoyancy in the Real estate business by the developers.

 

We are aware that there are constraints on the availability of open land within the city limits coupled with fast growing demand for houses and shortage of housing stock. On the other hand that there are thousands of ageing buildings which are dilapidated and have reached a stage where it is not possible to carry out structural repairs and rehabilitation as the same are not economically viable. The redevelopment of old building has become a necessity since the problem of old and dilapidated buildings in the city of Mumbai grows more acute with each passing year and with each passing monsoon more and more building becomes dangerous and unfit for habitation. Many buildings collapse each year, killing or injuring people. Many of these buildings are run down as they are not repairable and the only solution is to put them down totally and to reconstruct them.

 

Scarce availability has made land parcels expensive in the city, resulting in higher project cost. There are over 20,000 housing societies, 17,000 cessed buildings and over 3,000 MHADA structures are awaiting for redevelopment proposals. In fact, builders all over Mumbai consider slum redevelopments extremely lucrative and are vying for approval of such projects from the Slum Rehabilitation Authority of Maharashtra Government. Maharashtra, which is planning to prepare a master plan for the development of megapolis, has recently through an amendment to Section 33(7) of the DC Regulations of 1991, proposed to raise the floor space index (FSI) to 3 from the current 2.5, for redevelopment of cessed buildings.

 

Outlook

 

Mumbai requires a large number of redevelopment projects especially for increasing the availability of housing. If used correctly, redevelopment can be an economic engine that provides additional and better quality housing, helps in boosting property values, creates jobs, expands business opportunities, eliminates urban decay and improves infrastructure. Other potential benefits of redevelopment are reduced urban sprawl, improved economic competitiveness of a city's centre and better opportunities for safety and surveillance. The prices of land as well as flats are extremely high in Mumbai. This is why, in the past decade the government and developers have been concentrating on redevelopment projects.

 

With redevelopment becoming the next colossal thing in the Real estate sector, more and more developers are planning to expand their project portfolios. The main aim is to provide housing that is affordable to every common man. And not to overcharge the buyer - charge mostly the construction cost, and development cost of the area.

 

It is vital that the government should encourage redevelopment. But the existing policies of government have failed to encourage redevelopment / reconstruction on the required large scale because of the high economic and social cost and low returns. The obstacles and expected support from the government are predominantly in the areas like support from the government in terms of framing of proper laws for implementing redevelopment scheme effectively. The authorities should also consider making the project economically viable for the society/developer taking up such schemes. Innumerable approvals are required from the government for one single scheme and it almost takes one and half years for the redevelopment scheme to get cleared. There is an urgent need to fix up accountability on government side to clear the scheme in a time bound manner. Redevelopment schemes tend to take years due to issues like obtaining members' consent and official permissions.

 

The future of redevelopment in Mumbai city is very bright. As the city of Mumbai embraces the future, its old creaky buildings are being replaced by new swanky towers. Redevelopment is a sort of a magic wand that is completely changing the cityscape. Redevelopment has been envisaged to rejuvenate Mumbai which is facing tremendous land shortage.

 


 
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