5 things to know about 50% premium waiver for cluster development in Mumbai

Cluster redevelopment optimises land use by replacing older, low-rise structures with taller, more compact buildings, say developers.

The Maharashtra government on May 30 announced a 50 percent premium waiver payable by real estate developers for its cluster development policy in Mumbai for a period of one year, a move that is expected to aid the redevelopment of old buildings in the city.

While the developers have welcomed the move, several mid- and small-sized developers have maintained that this move by the government will only help the big top 25 developers in Mumbai who have the liquidity to undertake cluster development in the form of redevelopment projects.

But what does it mean for a city like Mumbai that is known for its vertical expansion? The Confederation of Real Estate Developers' Associations of India (CREDAI)-Maharashtra Chamber of Housing Industry (MCHI), the apex body of developers in Mumbai, has this to say about the announcement.

1: Open spaces and recreational facilities: Cluster redevelopment schemes typically include the development of open spaces, parks, and recreational facilities. This helps create green spaces in the densely populated areas of the city, providing residents with areas for relaxation, exercise, and community gatherings.

2: Efficient land use: Cluster redevelopment optimises land use by replacing older, low-rise structures with taller, more compact buildings. This allows for increased housing density without encroaching on new areas or green spaces. This reduces the strain on urban infrastructure.

Related stories

Mehul R Thakkar

Special Correspondent|Moneycontrol

• 
  New players have entered Mumbai real estate market and we welcome their presence: Abhishek Lodha
• 
  Mumbai real estate market records 9% rise in property registrations this month
• 
  MahaRERA tells developers to declare parking space details to homebuyers

3: Safety and structural stability: Old buildings in Mumbai are prone to structural weaknesses and pose risks to the inhabitants. Cluster redevelopment involves the demolition of such buildings and the construction of structurally stable and earthquake-resistant structures. The new buildings adhere to modern safety codes and regulations, ensuring the safety of residents.

4: Enhanced infrastructure: It means wider roads, improved water supply and drainage systems, better sewage facilities, and upgraded electrical networks. The overall infrastructure upgrade benefits not only the redeveloped buildings but also the surrounding areas.

Also read: Mumbai cluster development policy: Maharashtra govt announces 50% premium waiver for 1 year

Developers’ body welcomes the move

“We appreciate the government's decision on 50 percent premium waiver for cluster development in Mumbai. This important decision holds immense potential to enhance the quality of life for residents of existing tenements. It not only prioritises safety but also ensures the provision of adequate parking facilities, which is a crucial aspect of urban planning. Moreover, the move discourages fragmented development of standalone buildings lacking proper infrastructure," said Dominic Romell, President, CREDAI-MCHI.

Injustice for standalone projects?

However, a developer from Mumbai not wanting to be named said that the announcement of a premium waiver only for cluster development is not fair for standalone development or redevelopment projects. The cluster development activity already enjoys many waivers, he pointed out.

"My view is that cluster development already enjoys higher floor space index (FSI) and other relaxations in the Mumbai real estate market. Now, the add-on will be this premium waiver of 50 percent. This will make the market more competitive and make standalone single-building projects unviable. This announcement may not only disrupt the rates but also affect the ongoing projects that are under approval," he added.