Mumbai: With the availability of land in Mumai drying up, real estate experts believe redevelopment is the only way forward for the megapolis.
"Availability of land is scarce. Due to sky-rocketing land prices and limited expansion possibilities, redevelopment has become the need of the hour," says Nikhil Bhatia, head of real estate consultant CB Richards Ellis' Western Region.
There are "hundreds of old buildings" in the city which are beyond repair, he said.
Big developers are now pursuing redevelopment projects to leverage the incentives offered by state. For redevelopment, the government offers floor space index of 2 (for MHADA- cessed buildings, it is 3).
DB Realty, Tata Housing, Unitech, Godrej Properties, Kalpataru group, Omkar Realtors, Hiranandanis, Oberoi Realty, Hubtown, Kumar Urban Development, Vakratunda group, HDIL and S Raheja are some of the leading players who have entered the redevelopment space now.
"Such incentives provide necessary boost....It becomes a viable proposition for builders as they do not have to spend on purchasing the land, which forms a major portion of cost. It becomes a win-win for developers as well as the buyers," PWC Associate Director Bhairav Dalal said.
Jones Lang LaSalle India Chairman and Country Head Anuj Puri argues that "if used correctly, redevelopment can be an economic engine". "Redevelopment also helps in boosting property value, creates jobs and eliminates urban decay and improves infrastructure."
He further says that other benefits are reduced urban sprawl, improved economic competitiveness of a city's centre, and better opportunities for safety and surveillance.
But regulatory bottlenecks are acting as dampeners, says head of Kumar Urban Development, Lalitkumar Jain.
"The main challenge is timely regulatory approvals and clearances. The government needs to look at realty reforms and relax FSI norms. Also, there is a need to bring some clarity in the policies. If this is done, we can flood the market with housing stock," Jain says.
Funding is also a major hurdle. "The government has not yet allowed foreign investment in redevelopment. So developers have to depend on domestic routes which are costly, thanks to the ever-increasing interest rates," Dalal said. "If these issues are tackled, redevelopment will be a success".