The Development Plan-2034
- Sitaram Kunte, Municipal Commissioner, Municipal Corporation of Greater Mumbai, (MCGM), shares highlights of the Development Plan-2034 and how an increase in FSI and simplification of approvals will boost the real estate sector in the city, exclusively with CW.
´The Mumbai Development Plan (DP) rejects statism, reliance on artificially created scarcities to raise resources, the culture of obtrusive bureaucratic control and, ideological policy-making. It is based on a new liberal paradigm and favours simplicity.
The DP-2034 is conceived as a framework for providing opportunity for securing adequate floor space for anticipated growth. It is not an entitlement, but a maximum that can be an attained subject to other conditions. It provides adequate scope for new construction at any time over the plan period. It avoids market distortions while providing reasonable incentives for inclusive development. Using a layer of premium FSI across the city will also help raise finances. The draft-DP 2034 has proposed zoning provisions permitting mixed land uses, which is the demand of the market. Further, since time of approval plays an important role in the cost of the project, the new DP is expected to reduce the time for approvals thus, reducing the cost in the process. The real estate market will competitively achieve the goals due to the non-restrictive nature of the plan.
In the case of FSI, DP-2034, has proposed two layers from the component of FSI as premium FSI, premium-A FSI at 70 per cent of RR rates and premium-B FSI at 100 per cent of RR rates. Although all other payments like premium for deficiency in open spaces, staircase or lift area premium, fungible FSI premium, additional FSI premium are proposed to be removed; the premium-A and premium-B from developments can be used for infrastructure development.´
The industry shares its views on the proposed development blueprint for the city. The Municipal Corporation of Greater Mumbai (MCGM) has a plan - a major one. Its proposed Development Plan 2014-2034 (DP) will serve as a blueprint for the city in the next two decades. Considering the importance of the plan, the corporation has opened the draft to public suggestions. This could very well be the most significant document for the real-estate sector in the city and is being subjected to very thorough scrutiny. Three of the most important points of the ´vision document´ are:
FSI to be increased from the base of 2.5 to around 8 by linking TDR (transfer of development rights) and buying premium FSI on ready reckoner rates (60 per cent) with a geographical distribution of the same.
Purely commercial development within 300 m of transit corridors and residential construction only beyond that point. Parking provisions in buildings in these areas cut to discourage private transport.
For development of plots over 2,000 sq m, 10 per cent of built-up area to be handed over to the civic body for lower income housing and project-affected people. To delve deeper into the implications of the plan for the city of Mumbai, CW asked key players in the industry for their analysis of the draft as well as recommendations for the way forward.
The industry reacts
Sarang Wadhawan, Vice Chairman & Managing Director, HDIL
´The recommendation of varied and area-wise FSI in Mumbai and MMR in the new DP is expected to address the critical issue of augmenting housing stock in a positive manner. However, clarity is needed on the implementation of the policy with regard to higher FSI in areas closer to transport hubs, such as railway and metro stations, or the business districts of Nariman Point and BKC, as there are restrictions on the height of residential and commercial premises. The DP does not specify how areas closer to the airport or railway stations can consume the full FSI, given that there are height restrictions. The recommendation to merge construction permits needed from various departments into a single authority will surely result in faster clearances for projects and this should result in speedier construction. An important issue along with increased FSI is creation of adequate infrastructure to support an increased influx of people arising as a result of more housing.´
Nishant Agarwal, Managing Director, Avighna India Ltd
´As majority of the projects in the city are redevelopment, the increased FSI does not apply to them. Tenants for the redevelopment projects will have to be made aware of the expensive FSI not really bringing any windfall for the developer. We need clearer guidelines in terms of approvals and settlement of tenants, which remains a bottleneck in Mumbai today. Further, the plan to curtail parking facilities for residential structures will be counterproductive as it will lead to more street or public space being used for parking. There should be clarity on parking spaces to accommodate the increasing number of private vehicles. Infrastructure should be developed to encourage the use of public transport. The city currently only witnesses redevelopment for smaller areas; through the DP, the government should encourage large-cluster redevelopment projects as they open up public spaces and build a well-defined urban character for the city while providing infrastructure like STPs, electric substation, etc.´
Manju Yagnik, Vice Chairperson, Nahar Group
´The higher FSI will impact only a few crowded areas of Mumbai, especially places where infra projects are coming up and there is no space for properties to grow vertically. While curtailing several concessions available under the present DP 35(2), it proposes higher FSI; the DP says even amenities like swimming pools, clubhouses and grand entrance lobbies will all be counted in FSI. Moreover, even mandatory amenities like society office, servant toilet blocks, refuge area, meter rooms and substations will be covered under FSI. This is an unjust policy and these amenities need to be freed from FSI. The DP is also silent on the earlier proposed circular of additional TDR that was linked with road width. While the increased FDI is a good tool to allow the city to grow and find solutions within the available land parcels, proper infrastructure planning must be undertaken. Also, this plan has its own benefits as approval processes can become simpler and faster.´
Abhishek Kapoor, Partner, Neumec Group
´As the additional FSI has to be bought under the ready reckoner rate from the market, the government is generating revenues with the additional FSI, not resulting in increased supply for price reduction. There has to be clarity on restrictions in using FSI like height restriction owing to proximity to airport, etc. The DP has to be finalized soon; the longer it takes, the fewer plans will be approved. This will lead to fewer projects being launched and increase in holding cost for developers. The process of approval should be simplified and hastened. It would really help if the whole process is streamlined and centralized, bringing in more supply and reducing the cost of the projects, benefiting end customers. As for the affordability factor, I do not foresee any price correction after the implementation of the DCR. However, the level of transparency in opening up the draft for suggestions is commendable.´
Gulam Zia, Executive Director- Advisory, Retail & Hospitality, Knight Frank (India) Pvt Ltd
´Buying existing buildings and societies is the only way to use the higher FSI in the city. This enterprise in itself is time-consuming and the legalities are also an obstacle. To fully capitalise on the increased FSI, going vertical is the only way, which will increase cost of construction per sq ft by Rs 5,000 to Rs 6,000, with the total cost rising around minimum Rs 20,000 per sq ft, making it unaffordable. When the previous DP was in process, for the initial years there was little clarity on the changes made. Everyone from sellers to developers and even the authorities were unsure of the full implications of the DP. It effectively stalled business for two to two-and-a-half years, with little progre`ss on approvals for new building plans. With the new change in the DP, the industry might go through a slump phase once again before any real change or result can be seen.´
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