The lack of greenfield land has made redevelopment the primary method used by Mumbai’s real estate developers to get land. According to market observers, one in three new launches in Mumbai come from redevelopment projects, which include housing societies, MHADA structures, and slums. These projects represent a potential of Rs 3 lakh crore. Nevertheless, despite the excitement, there are still few real sales on huge land lots, and developers have numerous obstacles in carrying out these projects effectively.
One of the biggest hurdles is that most redevelopment projects involve small land parcels, which restrict the free-sale component—the portion of the new development that developers can sell for profit. According to Knight Frank India, only 10% of the 700 redevelopment agreements signed involve land parcels larger than 1 acre.
Increasing homeowner demands, especially in affluent neighbourhoods like Bandra, Juhu, and Versova, are another barrier facing developers. Residents bargain for bigger homes—sometimes twice as large as their current apartments—as well as more corpus money for community upkeep because they are conscious of their property values. Additionally, developers have to pay for residents’ transit fare and moving expenses, which limits the amount of space available for free-sale apartments.
“After providing the increased area to existing members, there is not much left over for the free-sale component due to the small land sizes, even with favourable development control rules.”
The cyclical nature of Mumbai’s real estate market is another significant worry. Since redevelopment is a drawn-out process that frequently takes six to ten years, projects are susceptible to market downturns. Developers can find it difficult to sell the free-sale units at a profit if real estate sales level off by the time a project is finished.
“Redevelopment takes time—by the time agreements are signed and residents vacate, market conditions may change. Large developers may survive a downturn, but smaller ones could abandon projects, sell them, or delay construction until the market recovers,” said Gulam Zia, senior executive director at Knight Frank India.
Developers may even renegotiate the promised area for homeowners, further complicating the process.
Another barrier is the multi-phase approval procedure for redevelopment projects. Delays result from the necessity for society members to negotiate with developers, have numerous general meetings, and settle internal conflicts. Projects may be further delayed for years by legal disputes that arise between homeowners, their families, or society management committees.
“Society members often have varying demands for larger homes. Developers cannot satisfy all requests, so disagreements frequently lead to litigation, delaying projects,” Zia added.
Mumbai’s redevelopment industry continues to be a vital force behind urban rejuvenation in spite of these obstacles. According to experts, projects can go more quickly if approval procedures are streamlined, lawsuit risks are decreased, and developers are given financial certainty. The entire potential of rebuilding, however, might not emerge for years due to the complexity involved.
Source: Money Control
