MUMBAI: Realty developers maximize their plots' development potential through various Floor Space Index incentive schemes in space-starved Mumbai. But only few understand that projects built on base FSI, which essentially lead to more open space and also strike a chord with consumers, are commanding 50-100 per cent premium over the existing average price points in these localities.
For Instance, current prices at BeauMonde Towers, built nearly a decade ago, in Prabhadevi, are around Rs 90,000 per sq ft, up more than 100 per cent over the average rate in the locality. Prices at Parel's Ashoka Towers and Lower Parel's Ashford Casa Grande are 50-60 per cent higher than current rates in these micro markets, showed data from research firm PropEquity. FSI refers to the permissible development potential on a plot of land.
"The reason for such premium is quite simple. Mumbai has just 2.5 per cent of area as public open spaces and amounts to only 1.95 sq meter per capita, much lower than global standards, and lower than even Delhi and Bangalore," said Ashutosh Limaye, Head - Research and Real Estate Intelligence Service, JLL India. The premium being paid clearly shows home buyers' preference for a low density project offering exclusivity in the crowded Maximum City. And developers who are paying heed to this fact are receiving better response to their offerings.
"Higher FSI usage would compromise the project's exclusivity making it a very high-density development. Projects with 1.33 FSI would now be rare and heritage, therefore commanding much better preference by the customers. In a city like Mumbai, luxury in the true sense is open space,'" said Navin Makhija, MD, Wadhwa Group.
It is developing residential project W54 spread over two acres in Matunga with base FSI of 1.33. According to Makhija, the company has already sold over 60 per cent of the apartments at W54, mainly because of 85 per cent area being dedicated to recreational space.
Developers are also using base FSI to avoid any uncertainty that may occur due to policy decisions by authorities as experienced earlier in case of parking FSI scheme.
"From experience, I believe that incentive FSI schemes in Mumbai have, in the recent past, added undue risk on projects that have ultimately led to severe delays and uncertainty. Also, these incentive schemes would lead to multiple users that have competing requirements and dilute the project's exclusivity. For example, a single plot may have to accommodate highend residences and public parking or slum rehabilitation/low income housing," said Adarsh Jatia, MD, Provenance Land, owner of Mumbai's Four Seasons Hotel.
Provenance is also using base FSI to develop Four Seasons branded private residences in Worli and the project on 1.5 acre will have only 26 residences in a 55-story tower.
Another developer Indiabulls Real Estate has also opted for base FSI for its over 10.5-acre project Indiabulls Blu at Worli for the same reasons, as it offers five acres of open space. According to a company's spokesperson, the project has the lowest density of 33 per acre.
In Delhi too, this holds true as projects with low density are fetching a premium.
"When I bought my apartment in the under-construction DLF Magnolia project in 2009, open space and low density were key reasons behind it. Apartments here are more than twice the money you pay for projects in the vicinity," said Sameer Jasuja, CEO, PropEquity, while highlighting large apartments in Magnolia are priced about Rs 16-17 crore against Rs 6-7 crore for similar flats in the locality.
There are many advantages for customers preferring a development with 1.33 FSI instead of 4 FSI, like open spaces, better planning, better socio class neighbors, exclusivity, privacy, low maintenance cost, fast elevators, etc.