Maharashtra move to overhaul pagdi system set to revive stalled projects

Mumbai's long-stalled pagdi redevelopment ecosystem could finally shift as the Maharashtra government prepares a dedicated framework, promising clearer FSI norms, fast-track courts

Mumbai’s long-stalled pagdi (cess buildings) redevelopment ecosystem is headed for a major overhaul, with the Maharashtra government planning a dedicated regulatory framework aimed at breaking the deadlock between tenants and landlords, accelerating construction, and potentially unlocking more than 13,000 long-stalled projects across some of the city’s most congested pockets.

 

Deputy chief minister Eknath Shinde on Wednesday told the legislative assembly that a dedicated set of rules would be introduced to “free Mumbai from the pagdi system”, ensure fair redevelopment, and protect the rights of both protected tenants and landlords. Pagdi or cess buildings—largely pre-1960 structures—have long been trapped in disputes over tenant rehabilitation and landlord compensation, limiting redevelopment under existing regulations such as 33(7) and 33(9).

 

Industry experts say the move could release a wave of supply in land-starved areas such as South Mumbai and the central and western suburbs, provided the framework is implemented with clarity and speed.

 

The government will also seek high court approval to set up additional fast-track courts to clear nearly 28,000 pending tenant–landlord cases within three years, which will resolve legacy disputes that have paralysed redevelopment.

 

Anuj Puri, chairperson of Anarock Group, said the revised Floor Space Index (FSI) formula and dispute resolution mechanism would “speed up Mumbai’s redevelopment”, adding that the number of additional homes created could reach 44,000 or more by 2030. “Fast-track courts help settle disputes more quickly, which cuts down on delays. The framework turns initiatives that were stuck into real prospects,” he said.

 

With an incentive FSI of 60–70 per cent for cluster projects, developers could see earnings before interest, tax, depreciation, and amortisation (Ebitda) margins rise to 20–30 per cent, making these brownfield sites significantly more attractive, Puri added.

 

Developers also view the new regime as one of the largest buildable pipelines the city has ever opened. 

 

Chintan Sheth, chairperson and managing director (MD) of Sheth Realty, said thousands of cess buildings have kept parts of the island city “frozen in time” because of unresolved conflicts between landlords and protected tenants. “A dedicated framework that separately recognises tenants’ rehab FSI, landlords’ ownership FSI and adds incentive FSI/Transferable Development Rights (TDR), backed by fast-track courts, can finally unlock this deadlocked stock,” he said.

 

If executed well, it could improve safety in ageing buildings, add meaningful supply in core areas, and give lakhs of tenants a path to secure ownership instead of living in limbo, Sheth added.

 

Shinde added that Mumbai has over 19,000 pagdi buildings, of which more than 13,000 are still awaiting redevelopment, many in dilapidated condition. To accelerate rebuilding, the government plans to distinctly allocate the rehab FSI for tenants, ownership FSI for landlords, and the incentive FSI needed to reconstruct homes of economically weaker pagdi tenants at no cost. Any unused FSI, due to height or planning restrictions, will be offered as TDR.

 

Sujay Kalele, founder and CEO, TRU Realty, noted that Mumbai’s addressable redevelopment opportunity can grow from roughly Rs 30,000 crore today to around Rs 45,000 crore over the next few years, an expansion of close to 50 per cent as pagdi assets shift from legal risk to bankable projects.

 

While the actual redevelopment cycle may stretch over years due to audits, design, and construction, the industry expects the announcement to trigger fresh interest from organised developers. 

 

For developers, the clarity on economic viability, access to large contiguous clusters, and time-bound dispute resolution could make these projects more bankable—especially in parts of the city where new land is virtually unavailable.

 

Prashant Khandelwal, chief executive officer (CEO), Agami Realty, believes that the move will also improve the quality of life for multiple families. “For real estate developers, it will open up opportunities to create iconic buildings in Mumbai and opportunities for cluster development, which will enhance product quality and better living experiences. Overall supply will increase in the market, and the buyers will have multiple options.”

 

Vivek Mohanani, CEO and MD, Ekta World, stated that while the supply will increase, it will help stabilise property and TDR prices around South Mumbai, particularly the markets like Worli, Dadar, and Matunga. Mohanani believes that “areas of Worli and other locations are quite overly priced comparatively right now”.

 

According to Anarock, the Mumbai metropolitan region (MMR) saw approximately 29,565 units launched in the third quarter of 2025 – similar on a yearly basis and up 5 per cent on a quarterly basis. On the other hand, the sales in the city stood at 30,260 units, a quarterly decrease of 3 per cent and a 16 per cent yearly drop.

 

According to Square Yards Data Intelligence, average property prices in Worli stood at Rs 80,308 per square foot as of September 2025. Meanwhile, prices in Dadar (East) stood at Rs 48,307 per square foot.

 

Vishal Ratanghayra, founder & CEO of Platinum Corp, stated that the move has the potential to unlock over 3,000 acres of prime urban land in the island city. 

 

Additionally, Dr Niranjan Hiranandani, chairperson, Naredco, believes that provisions such as FSI and TDR will strengthen project viability, encouraging developers to take up redevelopment in older neighbourhoods.  Amit Jain, chairperson and MD, Arkade Developers, said, “This will not only accelerate the renewal of nearly 13,000 ageing buildings but also significantly de-risk projects for developers. Clarity on entitlement, the option of TDR where FSI cannot be consumed, and the introduction of fast-track courts to resolve long-pending disputes open up a sizable pipeline of viable projects across the city’s most strategic micro markets."  

Shifting skylines

• New regulatory framework aimed at breaking the deadlock between tenants and landlords
• Will also seek to protect rights of both groups
• Has potential to unlock more than 13,000 long-stalled projects

 

(With an input from Gulveen Aulakh)