Mahindra Lifespace Developers Ltd's Managing Director and CEO, Amit Sinha, warned in an interview with Moneycontrol that the recent changes to Mumbai's transferable development rights (TDR) policy could potentially derail the current real estate sales cycle. Sinha expressed concerns that developers might pass on increased costs to homebuyers as a result of the new policy.
The Maharashtra government, as part of the Dharavi redevelopment project executed by an Adani group subsidiary, requires that at least 40 percent of TDR requirements for developers in Mumbai be sourced from the Dharavi project at 90 percent of ready reckoner rates.
"All the approval costs will be transferred to customers. In the current real estate cycle, I don't think issues like GST or RERA will pose problems. The only thing that could derail this boom cycle is higher-than-normal price increases, which could be driven by greed or statutory changes, and this TDR policy is one of those. A structural decision on TDR has the potential to affect market buoyancy. I'm concerned about whether it will affect sentiment and lead to a five-year slowdown in the market," Sinha said.
Sinha also noted that while the Dharavi project requires significant capital due to its size, developers not participating in the project should not be subjected to its conditions.
"Although the government mentioned the TDR condition in the Dharavi bid documents, many of us did not want to participate in the project. That does not mean we should be subject to its conditions. TDR prices should be determined by supply and demand, or there should be a period of moratorium on it," Sinha added.
Most major developers use TDR, a certificate issued by civic bodies to landowners or developers to offset construction restrictions, to build higher or add more amenities to their projects.
Mahindra Lifespace Developers, which previously focused on affordable-to-mid-range residential properties with occasional forays into premium projects, has shifted its strategy due to a slowdown in affordable housing sales. The company is now concentrating on the mid-to-premium housing segment in select cities, including Mumbai, Pune, Bengaluru, as well as Jaipur and Chennai, where it has significant land.
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