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Mumbai - Development + Policy Clarity - But Prices & Interest Rates Spoil

Tuesday, May 24, 2011

After a 6-month lull during which very few building plans were approved, municipal authorities in Mumbai recently approved a number of building plans. None of these approved plans deviated from the development control regulations and did not seek any "concessions" that would allow developers to sell more than the applicable FSI on the plot.

New approvals hold promise of new supply. However, the liquidity environment for developers remains extremely tough, with many mid-sized developers resorting to expensive new debt to re-finance maturing ones. Combined with their unwillingness to cut prices to improve volumes, we feel many developers will delay launches, as the demand environment is weak (for which they have only themselves to blame!).

Mumbai Redevelopment FSI 3.0:The government also approved the proposal to increase FSI for redevelopment of cessed buildings from 2.5x to 3x. This increase can be availed by existing projects where construction has not gone beyond the plinth level. Also, the cap on flat size (earlier at 753sq ft) has been removed. However, the new rules require a side space of 6m against 1.5m earlier and require the developers to take permission from the high-rise committee of the BMC in case the height of the building is more than 9 times the breadth of the plot.


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