Maharashtra State Government Encourage Cluster Redevelopment
The state government amended Development Control (DC) rules in the city encouraging cluster redevelopment. Cluster development is developing an area comprising several buildings rather than individual structures.
In a recent move, Maharashtra Chief Minister Prithviraj Chavan has asked state officials to work out a plan under which cluster development right can be auctioned to the developer by the government instead of developers getting consent from residents. Cluster development is developing an area comprising several buildings rather than individual structures on a minimum one-acre plot. Aimed at redevelopment of cessed buildings and rehabilitation of slums, the state government amended Development Control (DC) rules in the city encouraging cluster redevelopment.
In 2009, Ashok Chavan, the then Chief Minister, had announced a floor space index (FSI) as high as four for redevelopment under the scheme. While it was an obvious bonanza for the builders, however, they were also obliged to provide amenities like parks and roads.
“While till recently, mill land redevelopment were the only major opportunity for large land parcel development in central Mumbai, cluster development has brought many opportunities to developers especially in south and central Mumbai where there’s limited free space for fresh development,” says Ravi Ahuja, Executive Director, Development Services, India, Cushman & Wakefield.
A project at Currey Road Mumbai and Parel Mumbai respectively, while another one proposed at Mahalaxmi are examples of cluster development in the city. These proposed redevelopments projects are coming up with multiple high-rise structures with a project schedule spanning over four years. While the decision is expected to bring an increased supply and curb high realty values in the city, developers, however, are expected to face major challenges in executing these projects.
According to Amit Goenka, National Director, Capital Transactions, Knight Frank, the cluster development project is more of a “wishful thinking”. “It’s been sort of a procedural challenge under 33(7) of the Development Control Rules (DCR), which governs reconstruction of old buildings belonging to the civic corporation and other cessed buildings (where housing board charges fees for carrying out structural repairs to the building) in the island city. Moreover, as per Section 33 (9), which deals with repairs and reconstruction of cessed buildings and urban renewal schemes, the matter is first referred to the Urban Development Committee, besides the Ministry of Environment and Forests. After this, it moves to the Empowered Committee comprising members of various departments and authorities. All these procedures make it a cumbersome and onerous task. There should be, therefore, provisions for a single window clearance for cluster development projects without such multiple hoops.”
It is said that cluster development is a capital intensive initiative as compared to redeveloping single buildings since it involves temporary housing of existing tenant or buying their existing apartments coupled with longer development cycle of these projects. Besides this, getting approvals from multiple landlords and tenants would result into a longer turnaround period in project completion. Additionally, with many proposed projects under litigation, project timelines could further escalate.
Shailesh Sanghvi, Director, Sanghvi Group of Companies Said, “How to convince and tackle the owner for the cluster development is a major issue that needs to be addressed.The government should look towards streamlining the policy as per the market value of the plot. There is a need for clarification on the subject and not just formulation of the policy but execution of the process is also important.”
According to Ahuja, while the state government can do little to address these challenges, it can, however, simplify the process of cluster redevelopment by undertaking certain initiatives.He observes that developers approaching tenants and landlords on a case to case basis will be a time consuming and costly initiative. “The state government can, however, identify various cluster to be redeveloped and redevelopment details highlights number of households to be rehabilitated, amenities to be provided, additional infrastructure to be developed. This will help developers take informed development decisions (regarding cost and timelines) as well as guard interest of tenants,” he says. He further observes that the state government can prepare a phase wise plan of cluster development in the city rather than haphazard project approvals. In addition to this, it must ensure upgradation of infrastructure like water-supply, roads, among others.
At the moment, there are some 16,000 old and dilapidated building in the island city which are eligible for redevelopment, which could translate into creating space in this land starved island city.
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