Developers are cheering Mumbai’s new Development Plan 2034 (DP 2034) not only because it offers them a higher floor space index (FSI), but also because the premium they have to pay to the government in exchange for the extra FSI has been lowered.
DP 2034 proposes to charge 60% of the ready reckoner (RR) rate for both residential and commercial constructions against 60% of the RR (for fungible FSI) in residential developments and 80-100% of RR for commercial constructions. (The FSI is a measurement that defines the extent of construction permissible on a plot. An FSI of 5 means a built-up area of up to five times the size of the total plot. Fungible area is the additional permissible constructed area such as flower beds, terraces, voids and niches).
Nonetheless, Mayur Shah, MD, Marathon Group and president, Confederation of Real Estate Developers Association of India (CREDAI), said, “CREDAI had asked the government to fix the premiums in a range between 25% and 40%,” suggesting that their demands have only been partially met. “The premium is decided based on the land rates which have been going up every year. Therefore, today, the base rate is very high. However, this is still a good move by the government,” he added.
Manohar Shroff, vice-president, Maharashtra Chamber of Housing Commerce (MCHI), Navi Mumbai, said, “It is a boon for developers. However, once the supply comes into the market, there will be a downward pressure on prices.” Ghulam Zia, executive director, Knight Frank India, agreed, “The supply will impact the market after two-three years. By then, if the demand still supersedes the supply at that time, prices may hold, else they would fall.” The immediate impact of the increased FSI will be felt on the affordable housing and the commercial segments, he added. “In both these segments, there is huge demand. Prices have been holding for affordable housing and going up for commercial buildings. With this opportunity for more stock, prices will normalise in future,” Zia said, adding that the mid to high end luxury housing segment would continue to remain under stress.
Residential FSI in the suburbs has seen a small increase to 2.5 from 2 while for south Mumbai, it has been increased to 3 from 1.33. The FSI for commercial construction has been increased to 5 from the existing 2.5 in both the city and suburbs. This decision was taken after much discussion among the planning committee of the Municipal Corporation of Greater Mumbai (MCGM) as a measure to “repopulate” the island city, where the last census showed a drop in population. For redevelopment of housing societies more than 30 years old, DP 2034 also offers 15% additional FSI free of cost.
