A cartelisation of Mumbai’s real
estate, one of the costliest in the world, in the matter of
transferable development rights (TDR) has put upward pressure on prices and has
also caused concern in policy circles. In a recent development, just six-odd
builders and developers hold 70 per cent of the 2.5-3 million sq ft TDR
available. The price of TDR has also surged to Rs 2,500-Rs 3,000 per sq ft from
Rs 800-1,000 sq ft in the past six months.
TDRs are rights granted by the
civic or state agency to a property developer who surrenders land to the
government and, in exchange, is allowed proportionate or more development
rights on land in the vicinity or northwards. He may sell that property so
developed or sell the right itself, the TDR; these are transferable.
Realty sector sources said the
Mumbai cartel had meant a rise in TDR prices practically every month. The
development is a sequel to a 2008 order of the High Court here, which stayed a
state government decision to allow 33 per cent extra building rights (measured
as more of Floor Space Index, or FSI, the ratio of what can be erected on a plot
of land to its area) in return for more premium.
The order was in response to a
public-interest suit on the issue.
A state government official, who
did not want to be quoted, said the government may approach the court shortly
to reiterate its plea for additional FSI (they may even go to the Supreme Court
to get the stay vacated, say officials). The higher FSI, if allowed, will stop
the builders’ cartel from jacking up prices at will, he said.
Maharashtra’s minister of state
for housing, Sachin Ahir, said: “The government will take all necessary
measures to curb cartelisation in the use of TDR in Mumbai.”
Sunil Mantri, chairman, Sunil
Mantri Realty, said, “Prices of TDR are unaffordable.”
However, Nainesh Shah, executive
director of Everest Developers, argued that TDR rates can be brought down only
by an increase in the stock of land and the government is the only entities
that can make this happen. “More land needs to be released,” he said.
Ashutosh Limaye, associate
director, strategic consulting, Jones Lang LaSalle Meghraj, said TDR trading
follows the open market principle. For areas that are popular and in demand real
estate India development (Bandra, Chembur, Vile Parle, etc), land prices
is high and it makes sense to buy TDR even at a higher rate.
Mumbai’s own peculiarity is that
TDR, in practice, can only be deployed in the northern suburbs, while it is
generated in the area south of this. This contributes to the upward pressure on
its price. The government order which the court stayed, on allowing more FSI on
payment of a premium, had sought to widen the supply, was the official
argument.
Opponents of the way TDR has
worked in practice, including those who went to court on the issue mentioned,
argue that it has led to congestion in the suburbs, haphazard and unplanned
development, and intense pressure on infrastructure. It may be noted that this
policy, pioneered in Mumbai, has since been adopted by state and civic agencies
through the country.
