<p>With limited availability of open land parcels in the city, major developers are now looking at venturing into the redevelopment space, say industry experts.
"Due to scarce availability of unoccupied land, growth in real estate, particularly in terms of fresh supply is largely dependent on redevelopment activities," global property advisory DTZ India chief executive Anshul Jain told PTI.
"As a result, slum redevelopment schemes as well as redevelopment of old cessed-buildings are playing a key role in realty development in Mumbai," he said.
Scarce availability has made land parcels expensive in the city, resulting in higher project cost, he said.
"However, in case of redevelopment and rehabilitation, land cost is much lower and provides better returns to both developers as well as investors," Jain said.
There are over 20,000 housing societies, 17,000 cessed buildings and over 3,000 Mhada (Maharashtra Housing and Area Development Authority) structures, which are waiting for redevelopment proposals.
Maharashtra, which is planning to prepare a master plan for the development of megapolis, has recently through an amendment to Section 33(7) of the DC Regulations of 1991, proposed to raise the floor space index (FSI) to 3 from the current 2.5, for redevelopment of cessed buildings.
DB Realty, Tata Housing, HDIL, Unitech, Godrej Properties, Kalpataru group, Omkar Realtors, Hiranandanis, Oberoi Realty, Hubtown, Kumar Urban Development, Vakratunda group and S Raheja are some of the players who are into redevelopment space now.
"Mumbai requires a large number of redevelopment projects especially for increasing the availability of housing. Recently, we signed a few deals for redevelopment projects. We will continue to look to extend the redevelopment model in our project portfolio," GPL Managing Director and Chief Executive Pirojsha Godrej said.
S Raheja MD Ram Raheja said: "In a city like Mumbai, where land is a major constraint, redevelopment is the best way. We have already signed deals for three redevelopment projects in Bandra and Kalina. We are looking at closing in three to four more deals in suburban Mumbai this year."
Real estate consultancy firm Jones Lang LaSalle, however, maintained that redevelopment must produce tangible economic benefits so that the trouble and expense of it is justified.
"If used correctly, redevelopment can be an economic engine that provides additional and better quality housing, helps in boosting property values, creates jobs, expands business opportunities, eliminates urban decay and improves infrastructure," JLL India Chairman and country head Anuj Puri said.
Other potential benefits of redevelopment are reduced urban sprawl, improved economic competitiveness of a city's centre and better opportunities for safety and surveillance, he added.
Apart from developers, fund advisors are also keen on investing in redevelopment projects, Jain said.
"The Ajay Piramal group controlled Indiareit Fund Advisors recently proposed to raise a Rs 500-crore Mumbai Redevelopment Fund aimed at investing in redevelopment of slums and tenant properties in the city.
"Besides this, Kotak Realty Fund and Red Fort Capital are also two other examples of fund advisors who are willing to finance redevelopment projects," Jain added. NNNN