Thursday, June 10, 2010

High court quashes FSI increase in Mumbai

Buillders are anguished at this order since now they will have no other option but to raise rates by 10-15%.

The best thing is to move out of Mumbai into Pune, Bangalore, Hyderbad or Chennai .There is absolutely no point in paying 1.5 crores to live in 2 bed apt when your salary is a fraction of the loan.

The only people who can buy are those with black money or those whose Mumbai projects are going into redevelopment. Every building over 30 years in age is going for redevelopment and all these residents are getting a good package from the builders.

From what I hear the builders offer

18 months of rent
A lumpsum amount
20-25% extra carpet in the new building.

Many times some owners sell the flat to the builder and move into a different location.

I've seen some projects in my area getting sold out in no time and those flats are sold to mostly investors with deep pockets. End users rarely get a chance to participate in this process.

so the best thing for anyone who can, is to move out and get out of this mess. Ive also noticed a tendency of some of the owners to move to Pune. Today's Times of India - Mumbai edition has a 4 page supplement on Pune real estate. That should speak volumes that Pune builders are courting the Mumbai population with the terms 'affordable' in every other sentence. 3000-5000 per sq/ft seems to be a steal when compared to 10,000 per sq ft in the Mumbai suburbs.

Hindustan times article is below.

Buying a flat in the suburbs will now get even more expensive, after the Bombay High Court on Thursday struck down the state’s decision to increase the Floor Space Index (FSI) for suburban constructions to 1.33 from 1.

The FSI determines the maximum amount of construction that’s allowed on a plot of land. An FSI of 1 means that on a 1,000 sq ft plot, construction cannot be more than 1,000 sq ft.

All new projects have to adhere to the ruling, which came after the April 2008 Government Resolution (GR) was challenged by resident Amit Maru.

This means builders will now have to buy more FSI through Transfer of Developmental Rights (TDR) from the open market. The maximum permissible FSI for suburbs is 2 of which 1 is permitted by default, and builders can acquire the additional 1 through TDR.

In the 2008-09 Budget, the state had decided to offer an additional 0.33 FSI on payment of premium, which reduced the amount of FSI builders had to acquire from private parties. This had, to some extent, reined in TDR prices.

Under the GR, the premium to be paid for the additional FSI ranged from Rs 7,000 per sq ft in areas such as Manori to Rs 23,000 in Bandra.

“We have to pay extra money to buy TDR from the open market and will pass this burden to consumers,” said Sunil Mantri, president of Maharashtra Chamber of Housing Industry and owner of a construction firm.

The court struck down the GR saying it’s against the Maharashtra Regional and Town Planning Act, 1966, as it does not have a provision for levying a premium.

14 comments:

Bindas Bhai said...

Pancjshil is launching EON Homes at Kharadi, Pune. My reco is to buy. This will be a lifetime investment.

Bindas Bhai said...

Sorry it is Panchshil
panchshil.com

Anonymous said...

I'd suggest Mira Rd/ Bhayander area for those who work and reside in Mumbai. If one is moving to Pune and not a Marathi origin, expect trouble in the future. Pune is maharashtrian bastion .

Anonymous said...

Sundaaaaaassss Bhaaaiiiiii!!

One year back you said you were buying pune and now you are selling!! Pump and dump, that's your game isn't it??!!!!

Also you were saying mumbai is not worth it anymore..

Tells me people like you will be jobless soon..

Also, looks like builders are getting into the habit of blackmailing..increase FSI or else price will increase, sell more land to builders else price will increase...it's funny and interesting to watch. let's see how long this charade will continue and what twists and turns it will take..

Raghavendra Naik said...

Quashing of FSI ia a good step taken by the court that will benefit us in the long run. Currently due to the shortage of flats/homes, the prices have remained high. However, we can expect the situation to ease with the township projects coming up in and around Mumbai, in places like Panvel, Karjat, kasara, kalyan etc. All these places will be linked by high speed trains and 8 lane highways. Once the project is completed, commuters from panvel can reach churchgate in just 30 minutes.

As the saying goes, 'no pains, no gains' all of us have to be patient. After few years , you will certainly look back and marvel the development, at the same time proud to be living in a world class city equaling cities like london, paris, newyork, toronto.

If you look back at the history, in 1950 singapore was a bigger slum than our Dharavi but they made it a world class city in just 20 years. Our government is striving very hard to achive this sort of development, and I am sure that they will succeed.

I request all of you to bear with the government and let not the negative personalities get better of you. There are lot of people who want to see our Bharat destabilised and such people sow the seeds of distrust by their pessimistic blogs.

JaiHind and Jai BharatMata

Anonymous said...

Raghavendra, any timelines to your pipe dreams..Which rail corridor? Has the feasibility study been done? Is there a budget? When does it start? By What time will they deliver?

I can then plan to add 100% delay and plan to wait out that time..

shailesh said...

Oversupply in Mumbai luxury housing looms large

In all, Lower Parel is expected to see over 10 million sq ft of residential supply in the next three to four years, according to Religare Capital Markets.

On Tuesday, the Lodha group announced a 117-storied residential tower, World One, touted as the world’s tallest residential tower, on the defunct Shreeniwas Mills plot in Lower Parel. The tower will have 276 apartments and a built-up area of 1.2 million sq ft. With prices only millionaires can afford—Rs 7.5-50 crore—the project is expected to have over 200,000 sq ft of landscape area for the residents, with am 80,000-sq-ft sports club at 175 ft above the ground.

Just a few yards away, DLF, the country’s largest developer, is planning to launch Mumbai’s largest luxury residential project with a built-up area of 4.5 million sq ft, where it is building three towers of 90 floors each. The entire project is expected to have around 1,000 apartments in a price range of Rs 5-10 crore.

Many say pricing will be the key in selling such apartments. While Lodha did selective marketing of its World One project among its old customers at Rs 25,000 a sq ft, DLF is also expected to sell the apartments in the similar price range.

“We believe new launches from DLF, Lodha and Raheja have to be at a decent price (Rs 15,000-20,000 per sq ft) to bring absorption in Lower Parel,’’ said Religare analysts in a report. Adds Raminder Grover, chief executive of Homebay Residential, a property consultant: “Developers need to be realistic.’’

Developers unfazed
Developers, however, believe there is enough room for their projects. “There may be some moments of oversupply but there is a depth in the market. Good products definitely sell in the market,’’ says R Karthik, senior vice-president of the Lodha group, which has almost sold off its Bellissimo project in the Mahalaxmi area of Mumbai.

“There will be demand for projects in these areas as no major supply is coming up in other parts of Mumbai. I feel there is sufficient supply in this area to meet the demand,’’ says Vinod Goenka, chairman of DB Realty, which is developing premium residential buildings in nearby localities.

Goenka believes prices in the area will not go below Rs 20,000 per sq ft, given the cost of land and construction.

Anonymous said...

Thanks BB!!!

surabhi said...

nice post for mumbai properties. Find more mumbai properties at mumbai classifieds.

Rockon said...

Nice post for mumbai properties

kaushik said...

It is true that Mumbai is costiest city but what is the way out.A middleclass families cannot afford a very high price which have been seen in 2009 and 2010.I think people are not moving out of Mumbai but they are shifting to their requirement.

Anonymous said...

ROMF is such a fraud...Lok Hosusing and Bennette coleman are a fradu!!!

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