Posted on 20 November, 2023 by Sugee Group
Maximum City, Financial Capital, Economic Powerhouse, City of Dreams – these are few of the many titles used for Mumbai. While they convey the dynamism and energy of the city, they also indicate how Mumbai attracts millions in search of a better future. Home to a teeming 2.71 crore population, Mumbai continues to witness surging demand for housing. In this scenario, redevelopment of old buildings and housing structures has emerged as viable option to cater to the housing needs of the burgeoning metropolis. With limited opportunities for greenfield developments in Mumbai’s central areas and suburbs, redevelopment helps to address the city’s housing demand and supply.
Redevelopment involves restructuring aging buildings, mills, slums and giving them a fresh and better form. These buildings receive a fresh lease of life as they are rebuilt with higher efficiency, better use of land and more sustainable practices. Dilapidated buildings find a new form, while the quality of urban life also improves. Redevelopment also enables homeowners in existing properties to upgrade to bigger and better homes with modern amenities which yield higher capital value. At the same time, it unlocks potential for builders to build additional flats and sell them at market rates.
History and evolution
Redevelopment in Mumbai dates back to the end of the 20th century when mill land was redeveloped into commercial and residential properties comprising public housing. The practice emerged as a major trend in 1991 when Maharashtra’s state government framed regulations for the segment.
Redevelopment truly took off in 1999 when developers working on redevelopment projects were permitted to construct additional flats and sell them at market prices. Initially, small developers and local players took up redevelopment projects, but over time, the market for the segment has grown and several national and branded players have included these projects in their portfolio.
Presently, there are three popular models of redevelopment- developer-led, self-redevelopment, and development manager-led redevelopment. In terms of development opportunities, there is slum redevelopment, cluster redevelopment and redevelopment of old housing societies. The Dharavi Slum Redevelopment that recently made headlines is one of the city’s biggest redevelopment projects and is likely to transform the lives of a million slum dwellers while unlocking several hundred acres of prime land.
New phase of growth
As per data provided by the Maharashtra Housing and Area Development Authority (MHADA), over 25,000 housing societies in Mumbai are keen on development. In September 2019, a number of incentives and SOPs including 10% additional FSI were offered to housing societies which were planning for self-redevelopment. These measures and faster approvals have benefitted redevelopment projects in affluent pockets of Mumbai’s central areas such as Dadar, Matunga, Lower Parel and Worli. The relaxation of coastal regulation zone regulations has also paved the way for the redevelopment of many societies in coastal areas.
In recent times, redevelopment has attracted more developers because it gives them access to prime land in sought-after areas without a major upfront investment. With higher FSI, developers are able to construct more flats and sell them at market prices to earn a profit on their investment.
Challenges along the way
Redevelopment is not just a process to reboot and rebuild a housing society but it’s intrinsically linked to the urban planning and infrastructure of the surrounding neighbourhood. This includes transportation, water supply, power, sewage and, waste disposal. An increase in the FSI could put pressure on the infrastructure and municipal facilities and also lead to the congestion of roads and transport networks. Social infrastructure including schools, colleges, parks, hospitals could also feel the strain of redevelopment due to increase in the number of residents.
For developers, negotiating with housing societies of each building and getting the consent of more than 50 per cent owners is a tall task. They also have to deal with homeowners bargaining for higher built-up area in new flats and modern amenities in the redeveloped housing complex.
Untapped Opportunity
Despite these challenges, redevelopment presents several untapped opportunities in a metropolitan city edged by the sea on three sides. With high land prices, Mumbai’s central areas present the most lucrative options for redevelopment. As the redevelopment market comes of age, it is witnessing the entry of project management consultants and interest from private equity firms. Mumbai’s new infrastructure in the form of Metro Rail, Coastal Road and Trans Harbour Link will provide much-needed connectivity to its residents and improve the city’s infrastructure and transport network. The improved connectivity of localities such as Sewri and Wadala is likely to provide a fillip to redevelopment of residential properties in their vicinity. Ultimately, unlocking land parcels across many other areas for redevelopment will create new development avenues in Mumbai, leading to real estate growth across different asset classes.