Mumbai’s older housing societies opting for redevelopment, and the real estate builders taking up such projects, are turning to ‘greed’ in a bid to seek and offer ‘huge’ incentives, thus spiralling up property prices and getting into a ‘sticky wicket’ should the cycle turn adverse over the course of the project, Knight Frank India’s top advisor Gulam Zia has said.
"Some societies in Mumbai, such as in Juhu or Bandra, have been given huge incentives by developers, ranging from flats 50 percent to up to 150 percent larger. In some of these cases, renegotiation is bound to happen if the real estate cycle heads downward. These extra incentives have been caused by greed, and we are on a very sticky wicket. In some cases, prices have gone completely crazy," said Gulam Zia, Senior Executive Director - Research, Advisory, Infrastructure and Valuation at Knight Frank India, while launching a report on redevelopments of housing societies in Mumbai.
The segment is on an upturn due to large number of deals being negotiated, but the overall situation remains uncertain, Knight Frank India said, adding that the trend of excessive incentives can render projects unviable.
Gulam Zia said the relatively long gestation period for redevelopment projects - between 8 to 11 years from initial discussions to the delivery of new units - are a major reason for caution, as real estate cycles often rise, plateau, and decline over such time frames. Zia said this can upend developers’ calculations if there is a relatively large decline in home prices in any micro-market.
Most of the housing societies up for redevelopment in Mumbai as of May 2025 are built on small land parcels, averaging at a mere 0.45 acre. Zia said developers and society members would be well placed to keep the incentive of total area of rebuilt society given to existing members at moderate levels, so as to ensure long-term viability of the project.
"We feel that for markets whose prices trend at around Rs 40,000-50,000 per square foot, the incentive should not be more than 30-35 percent, such as in areas like Borivali or Goregaon. For markets like Juhu and Bandra, where prices are Rs 75,000-80,000, developers should not share more than 50 percent of the space. The recent trends of more than 50 percent share works in markets like south Mumbai, where prices trade at above Rs 1 lakh per square foot," he added.
According to the Knight Frank report, society redevelopment as a segment may unlock more than 44,000 new homes in the Brihanmumbai Municipal Corporation (BMC) limits by 2030, worth a total of around Rs 1.3 lakh crore. Much of this supply is expected to come from the western suburbs, with the hotspots being Bandra, Juhu, Andheri, Goregaon and Borivali, besides other pockets.
Society redevelopment projects in the lucrative south Mumbai, or island city, brings complications such as the Rent Control Act as well as a large number of ‘cessed’ buildings or slums. These are rent-controlled, old properties that pay a nominal cess to the Maharashtra Housing and Area Development Authority (MHADA) for maintenance.
Redevelopment of these projects is expected to be led by government agencies, such as MHADA or the Slum Rehabilitation Authority (SRA), although private developers often participate in these projects as a construction and development agency. The developers, in such instances, receive a free sale component in lieu of the construction of rehabilitation units.
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