Get ready for more skyscrapers in Mumbai. Sources say the government is preparing draft guidelines to increase the FSI (floor space index) limit in Mumbai to '4' for all redevelopment projects. While this move will be beneficial for builders as it will allow them to build more on the same plot of land.
CNBC-TV18's Priyanka Ghosh reports, quoting sources, that Mumbai's infrastructure may not be able to sustain such development.
The tag of unaffordability that comes attached with apartment prices in Mumbai these days might get snipped off if a proposed FSI of 4 is allowed to be built in all redevelopment projects.
FSI or the floor space index is the ratio of the total gross area of the plot to the carpet area. Currently, it is limited between 2.5 and 4 for redevelopment schemes in Mumbai.
Anuj Puri, chairman and country head, Jones Lang LaSalle, says, "A majority of a developers' costs is high land cost. But if you can build more on the same piece of land, the per square-foot rate (cost) begins to come down and that will help buyers."
But here are some stumbling blocks. One, whether or not prices actually drop depends on who will bear the cost of this additional FSI. If developers have to purchase this additional FSI from the government at ready reckoner rates, prices of apartments will rise. So for now, all eyes on the draft guidelines.
Another, more pertinent question is that allowing more developable space means higher skyscrapers. But can over-congested Mumbai have the requisite infrastructure facilities to support a higher density of population?
Sandeep Runwal, chairman, Runwal Group, says, "You have to also plan the implication of an FSI of 4 in terms of infrastructure — water, roads, drainage and open spaces. If they do not consider that some amount of open space has to be left, the population density of the city will keep increasing." Also: Will rupee fall bring NRI real estate investors in India?
With the island city having no choice but to grow vertically, the need to spur redevelopment is a must. More redevelopment means more joint development schemes between owners and builders, and hence, lesser land cost. But for this to succeed, there is a need to increase infrastructure that can support this.
And as the monsoons prove every year, there's still a long way to go.
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