Realty prices in Mumbai may rocket on back of Dharavi revamp TDR

Source: Realty Economic Times

Dharavi revamp TDR may push up Mumbai realty prices

The state urban development department has issued a new notification that requires city builders to use the transfer of development rights (TDR) from the Dharavi redevelopment project compulsorily. It said that 40% of the TDR needed for a building project must come from the Dharavi project.

Sources from the property market are worried that real estate prices in Mumbai may soar once the TDR from the Dharavi revamp project is available.

The notification, which was issued on November 7, states, “The amount of TDR will be equal to the floor space index. The highest sale price of TDR should not go beyond 90% of the value of land (the receiving plot) of the year of loading the TDR.” It also invites objections and suggestions within a month.

Experts from the real estate industry said: “The Dharavi TDR will be the costliest TDR at 90% of the land cost. Currently, the average price of TDR is 30-60% of the Ready Reckoner rate.”

Sunit Gupta, a specialist in property valuation, said that the redevelopment of Dharavi may need such incentives, but the drawback is that the price of a flat in Mumbai will increase significantly. “If the price of a plot in Malabar Hill is Rs 1 lakh per sq m, the price of the Dharavi TDR will be 90% of that price, which is Rs 90,000 per sq m. The price of a flat will rise accordingly,” he explained.

Varsha Gaikwad, Congress MLA from Dharavi, called it ‘Modani TDR’ and alleged that the Eknath Shinde-led government wants to “virtually give away the control of Mumbai’s real estate market to the Adani group” by issuing the notification. "It is clearly to create Adani group’s illegal monopoly of the TDR market by making it compulsory for all real estate construction to buy at least 40% of their TDR from them,'; she said.

Pankaj Kapoor, founder and managing director of Liases Foras, a real estate research agency, said, “Post-RERA, the housing market today is driven by demand and supply. Compared to other metros, flat prices in Mumbai have shown the least growth as the city has the highest inventory and the highest number of new launches after the discount on premium. Supply has increased keeping prices in check. Builders are now more financially disciplined as projects have to be completed on time. If the TDR makes a project financially unviable it will not be used at all.” The notification states that the amount of total TDR generated from Dharavi and available for use shall be displayed on BMC and DRP websites with real-time updates for information to the public.

Gaikwad warned that if the decision is implemented, it would make redevelopment by small builders unviable and set a bad precedent with disastrous consequences. “We shall oppose it,”; she said.