TDR policy for Mumbai proposes equitable spread of development

Realty experts say development incentives based on road width will be a big positive for the sector in the long term

Mumbai is set for more vertical growth, following the revised transferable development right (TDR) policy announced last week by the Maharashtra government. The policy envisages granting additional construction rights to builders, depending on the width of the road alongside a project site. Further, no extra construction benefits in the form of TDR will be provided for projects on roads less than nine metres wide. Builders are entitled to a basic floor space index (FSI) of 1.33 in the island city and 1 in the suburbs.

Realty experts argue that the long-term impact on the Mumbai real estate will only be positive.

Knight Frank executive director, Gulam Zia, told Business Standard, "Correlation of TDR with the ready reckoner value, instead of mere reference to northbound push, will ensure a more equitable and rational spread of development. Buyers looking out for a bargain may have a field day."

According to Zia, the revised policy has taken into account the existing infrastructure by linking TDR utilisation to road width, only to ensure that the already overburdened traffic scenario does not deteriorate further. Reinsertion of the old clause restricting TDR usage on stretches on both sides of railway lines also ensures already dense localities aren’t put to further inconvenience.

JLL India chairman and country head Anuj Puri says that the policy is likely to allow for scalable development keeping in mind urban infrastructure load. The fact that TDR incentives are being provided on the basis of road width, could offer greater development potential across major roads while limiting development on narrow ones. This concept of variable TDR could encourage development in a manner equitable to the surrounding physical infrastructure.

He however, says that the change in TDR norms is limited, wherein the maximum permissible has gone up from 0.5 to 0.67 in the Island city and to 1.0 in the Suburbs (based on road width).

"Consequently, there is also lower TDR for roads of narrower widths. In such a scenario, overall usable TDRs may not increase so much to bring about any change in TDR prices on account of this policy. However, creation of new houses in well-connected areas where demand is healthy may result in price stabilisation and not allow prices to rise in a runaway manner,'' Puri opines.

Gautam Saraf, Managing Director-Mumbai, Cushman & Wakefield, argues that the policy will help in regulating demand and supply of TDRs in the market as it will now be allowed to be utilized across the city. The pricing will also be under check as the government has indexed it to the ready reckoner rates of both the plots (generated and utilised).

"Further, a higher FSI will result in the availability of higher development area in the island city, thus aiding supply. This move along with the implementation of the Real Estate Regulatory Act (RERA) and the currency demonetization will only help in further institutionalizing the sector, bringing in more transparency and accountability,'' Saraf adds.