Maharashtra Banks On A Taller Mumbai To Fund Infrastructure, Slum Rehab

Maharashtra proposes to let developers make taller buildings in Mumbai by paying a premium as it looks to fund two key projects in the world’s second most crowded city: a new sea link to the suburbs and redevelopment of Dharavi slums.

The state plans to amend the Development Control regulations to allow 50 percent additional saleable area — or 0.5 floor space index — in a project to developers in the island city, suburbs and extended suburbs, a notification said.

The government is looking to boost infrastructure in the metropolis to keep pace with a growing population. It needs more than Rs 7,500 crore for the Bandra-Versova Sea Link. Moreover, its tenders for the Rs 25,000-crore Dharavi redevelopment project didn’t receive a single bid.

“The kind of money that is required for these two projects will be huge. But there will be enough demand for additional FSI,” Gulam Zia, executive director at property consultant Knight Frank India told BloombergQuint. Right pricing is going to be the key and the authorities need to realise that, he said.

The decision to allow additional FSI — the ratio of area covered by a plot to the saleable area — will also boost housing in Mumbai, ranked the second most densely populated city after Dhaka by the World Economic Forum citing United Nations data. The government has already allowed additional FSI to builders redeveloping old structures.

“This is a time when developers have to invest in the future project. While today’s market is very depressing, a smart developer is buying land to come in the market after three years,” Zia said. “I am sure there is a good market out there (for additional FSI).”

Basic FSI available in the Island city is 1.33 and 1 in suburbs. On top of it, the state allows transferable development rights based on the width of the road for which developers have to pay a premium. A plot fronting a nine-metre road gets 0.17 extra FSI in the island city. If the plot abuts on a 30-metre road, an additional FSI of up to 0.67 is allowed, according to current regulations. In the suburbs, it's 0.5 and 1, respectively.

The government now plans to increase the additional FSI available by 0.5 across the city—that would take the total FSI developers can avail to 2.5 both in the city and the suburbs.

The additional rights, for which the government will decide the premium, are not transferable. Developers usually trade or transfer FSI from one project to add floors in another.

As of now, the additional FSI sold by the government is split equally between the state government and the Brihanmumbai Municipal Corporation. The state has decided to change that. The revenue received from the sale of extra FSI will be split into four parts.

• 25 percent to the Maharashtra government.
• 25 percent for the Dharavi Redevelopment Project.
• 25 percent to the Maharashtra State Road Development Corporation to construct the Bandra-Versova Sealink.
• 25 percent to the municipal corporation.

The government has invited feedback on the proposal from stakeholders.