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New FSI norms fail to cheer Mumbai real estate firms

Shubhra Tandon, Mumbai, Financial Express

June 03, 2011

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The real estate industry remains wary of the euphoria surrounding the increase in floor space index (FSI) from 2.5 to 3 for cessed buildings (old and dilapidated buildings, built at least 40 years ago) in Mumbai. Though this decision of the Maharashtra government will result in additional supply of houses to a constrained Mumbai market, developers say some conditions would be difficult to fulfil in all projects.

The state government has ruled that the developer has to compulsorily leave a minimum six metres of space at the front and one metre on the other three sides of the building. “Though this looks fair when one considers that it will ensure better safety measures and provide proper access to the fire tenders, it may become a challenge in planning for smaller sized plots,” said Milind Korde, managing director, Godrej Properties Ltd.

“The developers try to achieve this requirement even today, but all plots in the island city are not exactly square-shaped. Therefore, fulfilling this requirement will not be possible in all cases,” said Apurva Shah, president (business development and sales & marketing), Kanakia Spaces.

Hinduja Realty Venture Ltd COO Ravinder Babbar holds a slightly different view. “Just increasing FSI is not enough. There is still no clarity on what the government will do towards infrastructure required to support this growth. And, if the developer is expected to create that social infrastructure as well, then the government should be reasonable in its expectation of payments for these plots.”

Among other requirements, the minimum tenement size has been increased to 300 sq ft from the earlier 225 sq ft, which the developers say had already been implemented through a government resolution on March 2, 2009.

The government has further decided that the developer will have to pay into a corpus fund the amount required for the redeveloped building’s maintenance. The amount will be fixed by the authority approving the building development. This payment will continue for 10 years. “This is still a part of the overall package offered while redeveloping the building. However, a notification in this regard will give it a compulsory structure,” said Shah of Kanakia Spaces.

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