Redevelopment is the future of Mumbai’s realty skyline
Feb 19, 2014
Source : The Times of India

 

MUMBAI: Five years ago, the redevelopment of Mumbai was on the priority list of government policies. After all, cities remain vibrant if people inhabiting them are enthusiastic about living in those cities. You cannot expect people to exude zest when most buildings in the city are crumbling. The other problem the city faces is that there is no fresh land for development. Hence, the state government is now focused on redeveloping the existing old buildings. However, for one reason or the other, this has not been happening despite the initial euphoria five years ago.

Sunil Mantri, president, National Real Estate Development Council (NAREDCO), explains, “The city of Mumbai, as we know, is centuries old. As a result of its sporadic growth and its rich culture and history, it has developed in an adhoc manner with no concrete town planning. It has pockets of affluent residences standing back-to-back, with large tracts of mass dwelling units or slums. There are also numerous dilapidated buildings that pose a risk to the lives of its residents. So, while Mumbai’s skyline is a pretty picture, there is much that can be done to give Mumbai a face-lift.”

In Mumbai, over two million people live in 19,672 dilapidated buildings in south Mumbai, with about 70 per cent residing in one-room tenements. Logically, these buildings should be slated for redevelopment without any delay. Amit Kulkarni, director, Varasiddhi Infrastructure, stressing on the need for redevelopment says, “Mumbai city expanded rapidly into the suburbs and beyond, post the 1960s and 1970s. The buildings that were constructed back then, are obviously in a dilapidated condition, most of which are cases fit for reconstruction or redevelopment. There is hardly any open land left in Mumbai where one can think of any green field project; the only option left is brown field or redevelopment of the property.”

Of these available options, redevelopment of dilapidated buildings has the potential to unlock maximum land for infrastructure and real estate development. Hariprakash Pandey, vice-president, finance and investor relations at HDIL, explains how, “The city is long and less wide, with an extensive coastline. Unlike other cosmopolitan metros of the world, the major airportsare located in the centre of Mumbai, causing massive congestion. There are mangroves on the eastern parts of the city, and due to environmental reasons, those plots have not been opened up for construction. Lack of an affordable housing policy has resulted in more occupation of government lands and build-up of slums on these lands. All these factors have limited the availability of potentially usable land and restricted developmental activities in the available land, due to more environmental and civic regulations.” As there is a severe limitation in getting land for development, redevelopment is the only available option.

Redevelopment of dilapidated buildings, slums and old mills, are the only alternatives. Anuj Puri, chairman and country head, Jones Lang LaSalle India, explains that “Redevelopment, as a method of urban renewal, may involve relocating businesses and people. It must produce tangible economic benefits so that the trouble and expense of redevelopment is justified. If used correctly, redevelopment can be an economic engine that provides additional and better quality housing, helps in boosting property values, creates jobs, expands business opportunities, eliminates urban decay and improves infrastructure. Other potential benefits of redevelopment are reduced urban sprawl, improved economic competitiveness of a city’s centre and better opportunities for safety and surveillance.”

The other advantages of redevelopment of a slum or a dilapidated building are that it results in free, safe and high-quality housing with good sanitary facilities for the economically weaker sections. Redevelopment decongests the city and makes it look young and beautiful. During the last 23 years, there are only 1,600 chawls that have been redeveloped. There are about 5,00,000 more units that need to be redeveloped. At that pace, it will take close to 200 years to redevelop Mumbai. There are some issues involved in redevelopment, Mantri points out.

“However, laws of the land make it difficult for any such action. Redevelopers have to provide the occupants with self-contained apartments of 300 sq ft each, and after that, recover the costs and generate margins through additional construction which can be a maximum of 50 per cent above the FSI awarded to the beneficiary occupants. This becomes very impractical at the current FSI levels, considering the expenses involved in rehabilitation. In addition, the law requires the developer to acquire the consent of least 70 per cent owners and tenants in order to undertake redevelopment. This is also a tall order and could take time. Meanwhile, the owners, tenants, are at risk as development proceeds at a snail’s pace due to the current laws,” he adds.

To ease the process, the Maharashtra government has announced some changes in the cluster redevelopment policy. Maharashtra chief minister, Prithviraj Chavan has announced the modified set of development control rules or DCR announced by the State Urban Development Authority for the Greater Mumbai region. The new rules now allow developers to pursue reconstruction/redevelopment of any building that has been around for more than 30 years. Also, consent from only 70 per cent of the landlords is now needed to begin a project, instead of the earlier 100 per cent, but parties that do not consent will have to be given adequate compensation. Kulkarni feels that the “Government has understood the importance of the matter and has proposed new schemes to take care of the redevelopment schemes across Mumbai, under different norms such as 33/7, 33/9, 33/5 and 33/10. In the next five to ten years, we will see a boom in the redevelopment sector.”

Explaining the situation at hand, Mantri says, “If the policy environment is right, there are a number of developers catering to all economic strata of the residents of Mumbai, who are waiting in the wings to undertake redevelopment. However, in order to get it right this time, the recommendations of all stakeholders must be taken into account so that the policy that emerges is optimal and maximises benefits for all concerned and the city of Mumbai at large.”

Puri does put in a word of caution though. “Redevelopment sometimes involves the use of eminent domain as a legal instrument to take private property for city-initiated development projects. This is sometimes seen as a means for regulatory bodies to acquire control on behalf of influential developers or developer cartels. If carried out in a non-consultative manner, redevelopment can result in an excess of high rises that compromise existing infrastructure, reduce the possibility of new infrastructure and increase the crime rate in a location. In order to be genuinely democratic, the process of redevelopment must be consultative at all levels. It should enable local citizens to have greater control and ownership of the direction of their community.” Community participation, sustainability and trust, are important watchwords. The government must act as an advocate and an ‘enabler’, rather than as an agency that enforces command and control.

Finally, redevelopment should not be only about improving existing structure. There should also be a focus on incorporating historic structures into new and rehabilitated development. In cities like Mumbai, it is important to preserve and enhance cultural, historical and community assets. The cultural fabric of the community must not be compromised.

 

 

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