Redevelopment Projects on the Rise, New Launches to Boost Home Sales in Mumbai

An ordinary day on the bustling streets of Bandra turned into a daylight nightmare as Behram Nagar’s 5-storey building collapses in a flash. Mumbai’s Malwani case which had claimed 12 lives in the most severe incident of building collapse has been moved to the High Court. Meanwhile, a simple faulty ceiling on the 3rd floor collapses entrapping 35 people in the building in the posh locale of Fort. What seems like news headlines from yesteryears are actually the recent incidents.  Such mishaps are normalised by their developers as inevitable consequences, trying to shed off from the grave responsibility.

 The Mahindra Group Chairman, Anand Mahindra tweeted “Monsoon in the ‘Maximum City’ is also a time of the maximum tears. With the chaotic, unplanned construction of the past, so many homes are at risk in the rains. Is it possible to carry out a multi-year survey of all structures at risk and reinforce them to prevent collapse?”

While these measures intend to prevent the collapse, the inevitability of a worn-out foundation overpowers these restorations. Mumbai floods of 2005 were a prime testament to a dire need for renovation from ground zero, as the repercussions were observed even years later, with faulty ceilings, rusty buildings, and ripped walls.

Industry experts have argued that the longevity of construction should not be undermined with a few temporary renovations, rather permanent, more re-establishing measures are required for reliability.

In short, this situation entails for redevelopment procedure:

Basic Concept of Redevelopment

Redevelopment is demolishing the existing structure altogether and constructing new architecture on that land. Basically, the benefits of this process are two-fold:

• The first is that the latest upgrades in modern architecture can be implemented.
• And secondly, idle land can be optimised for a better purpose, even in prime locations without huge investments upfront.

 The market value of the redeveloped project is substantially higher than that of a repaired project. The other aspect is that if the housing society is located in a posh locale, then the real estate value would increase further after redevelopment, ensuring better ROI. The housing society members can request changes in configurations, implement amenities, and revamp the area at the same time maintaining the FSI (Floor-Space Index). To get more insight into how FSI is executed in a project, check out Kolte Patil Jai Vijay project.

Moreover, redevelopment is the only resolution to control prices and boost supply in urban areas facing a housing crisis. So far, limited projects on unused land have been possible in Mumbai out of which some prominent properties of 2021 are at Kolte Patil Goregaon West, Kolte Patil Borivali West, and Kolte Patil Vile Parle.

Overall, old building redevelopment rehabilitates into a superior phase within the bonds of your previous home.

Why is Mumbai Redevelopment a Necessity?

Mumbai has an unwavering position as a highly aspired residence even after the high cost of living, or congested spaces. The USP of Mumbai is its lifestyle and the limitless possibilities that entice people from all over India to invest in homes. This rampant requirement of residences has led to a shortage of spaces.

The industry giants focussed on “Greenfield projects” – check out some of these for reference from Kolte Patil developer’s projects in Mumbai like Kolte Patil Vaayu, Kolte Patil Verve, Kolte Patil Evara, Kolte Patil Jai Vijay.

However, the trend of redevelopment was started by businesses like Orbit Corporation, RNA corp, Rohan Lifescapes, Rustomjee Group, Kalpataru Group, Wadhwa Group among many others that redeveloped societies as old as the 1940s, within a budget with higher gains.

While the suburbs are developed in full force owing to open spaces, the greater Mumbai needs redevelopment to accommodate more residents by increasing the elevations. Sky-rises is the only vertical solution for confined horizontal spaces. Industry Executives have evaluated that Mumbai Metropolitan Region requires approx. 400,000-450,000 units per year. So far, there are 19000 dilapidated buildings in the main city and 5000 in the outskirts.

The success of the redevelopment of old buildings in Mumbai has prompted even the influential names in the industry. Godrej Properties, Hiranandani, Tata Realty & Infrastructure, and Oberoi Realty have all turned tides towards redevelopment for augmenting their profits. A whopping Rs. 30000 crores (Source: Business Standard) has been so far committed to redevelopment.

On the other hand, the government has facilitated the redevelopment projects in Mumbai in and around the slum areas to develop the locale. MHADA (Maharashtra Housing & Development Authority) has approved over 193 projects between April 2020 to August 2021, to encourage redevelopment during the adverse pandemic years. In a way, this helped in stabilising the trembling real estate market.

Jitendra Awhad (Minister of Housing) stated that he fast-tracked the redevelopment of MHADA-led projects. The agencies approving the issued offer letters, cleared various stalled projects in areas like Chikhalwadi, Motilal Nagar, Patra Chawl, and BDD Chawls, revamping the Mumbai scene– one of the primary reasons for redevelopment in Mumbai.

Self-Redevelopment Projects in Mumbai

The other facet of this process that is beneficial for all parties involved, is the self-redevelopment of Housing Societies. In this process, the real estate developer is not involved, rather the architects and contractors come directly into the picture. This way, the housing societies have total control of the level of development they wish to incorporate with fewer risks of fraud and customising the premises.

In March of 2019, Maharashtra Govt declared special incentives towards self-redevelopment, as Mumbai Bank even announced a loan of INR 50 crores per project. This encouraged several other housing societies to follow suit, with suchupcoming residential projects in Mumbai to surge in 2021.

Conflict of Interests

Ideally, lawyers draw out a mutual contract between the developer and the residents catering to both. However, the reality pans out with several issues arising out of varied interests. For such Brownfield projects, every decision is inter-connected, which means the developer must comply with the 2-year deadline with a maximum of a year of extension. The developer is expected to give a minimum of 20% of the net project cost back to the bank as a guarantee. They are also responsible for providing alternate accommodations for the residents or offering hefty compensations.

The conflict arises when any of the agreements is not satisfied. Maharashtra govt has set up a separate panel as mediators for the pending lawsuits of ongoing residential projects in Mumbai to push such redevelopment projects boosting the housing sales.

Unified DCPR

Unified Development Control & Promotions Regulations was an initiative by the Maharashtra government to resolve the issues of redevelopment. From lift & lobby requirements to mandatory open spaces, and elevations of the skyrise, TDR (Transfer of Development Rights) all factors are regulated under this clause. The recent updates to this DCPR 2034 clause present more FSI than the previous rules of DCR 1991.

This update has also implemented the highrises as developers are granted permission to construct more floors, from the earlier restriction of 24 m height to 70 m height.

MahaRERA overlooks all these compliances and other formalities, and acts as a facilitator between the housing society and builders.

This rule also ensures that transparency is maintained between the developers and the residents and is citizen-centric for new homebuyers of the redeveloped projects in Mumbai.

Redevelopment Protocol

Step 1: Annual General Body Meeting (AGM) is arranged to pass the resolution for the redevelopment project. The by-laws state that at least 75% of the total members should be in agreement. Meanwhile, smaller, and older buildings need only 51% of approval.

Step 2: A suitable architect and Project Management Consultant (PMC) is appointed that strategizes and monitors the process.

Step 3: An evaluation report is provided by the architect- checking the feasibility, and other prospects.

Step 4: The Housing Society is required to set up tenders for builders/ contractors. Select an apt builder who is compatible with the prerequisites and tenders.

Step 5: The Society sets up an on-camera meeting with the presence of government officials from the deputy registrar’s office to attest to the selection of builder ~ a minimum of 70% of the quorum should vote in favour.

Step 6: A Registered Development Agreement is formulated by the committee with terms, clauses, and power of attorney with the builder. A consent form is signed with an irrevocable agreement.

Step 7: Within the compliances of DCPR, the builder commences the redevelopment.

RERA No.s :

Jai Vijay – P51800004446

Evara –     P51800026949

Vaayu –   P51800029034

Verve –    P51800028783