The Mumbai realty market is awaiting a policy change by the Maharashtra Government that could appreciate the prices in South Mumbai, while soften up the market in the suburbs. Real estate prices in South Mumbai range between Rs 20,000 and Rs 1 lakh per sq ft, whereas the rates in the suburbs range between Rs 6,000 and Rs 40,000 per sq ft. The state government is expected to grant an additional 0.33 per cent floor space index (FSI) to developers by empowering the city’s municipal corporation to charge a premium in lieu of the additional FSI. FSI is the ratio of total constructed area of a structure via-a-vis the plot of land on which it is located.
The realty experts in Mumbai market believe while prices in the suburbs could soften by 10 to 15 per cent, property rates in land-locked South Mumbai could go up by 10 per cent. This proposal has already been passed in the Maharashtra legislative assembly and a final approval by the legislative council, the upper house, is expected shortly. The move would increase the FSI in the suburbs from one per cent to 1.33 per cent, which would enable developers to construct on more space than allowed currently.
This has been done to bypass a recent Bombay High Court ruling that had rejected a state government’s decision to grant additional FSI in the suburbs. Coupled with tightening of finances for the scam-hit real estate sector and the absence of end-use buyers in an overheated market, the FSI sops for the suburbs could soften the prices in the near future, say analysts.
However, developers have their own point of view. Requesting anonymity a developer told Track2Realty correspondent that since that land and material costs are skyrocketing, I don’t think the extra FSI grant would help in any way to curb price rise. “It is very difficult to control prices in the whole of Mumbai because the demand is too high. Why are people not moving out where houses are available at virtually construction cost?” said Anand Gupta, former president of the Builders Association of India. In South Mumbai, stretching from Colaba to Prabhadevi, a possible restriction in the construction of high-rises is expected to push up prices.
The state is now planning to issue a notification to reduce the current FSI from 1.33 per cent in South Mumbai to restrict the number of floors in high-rises to address the problem of an infrastructure bottleneck. This would create a supply problem. Some analysts also say that there is no clarity in the proposed changes, which would confuse the end-buyer. “It all depends on how many floors are being allowed. If the government allows 50 floors in high-rises, then it would not make much of the impact, but yes, if they impose a restriction to only 20 floors, then prices are bound to go up,” said Samir Jasuja, chief executive, PropEquity, a Delhi-based real estate research firm.
