Mumbai’s coastal real estate sector is confronting uncertainty following revised permissions issued by the Slum Rehabilitation Authority (SRA) for projects governed by Coastal Regulation Zone (CRZ) regulations. Changes in the interpretation of Floor Space Index (FSI) calculations have triggered concerns over construction potential, developer profitability and the feasibility of ongoing redevelopment schemes.
The issue particularly affects premium coastal neighbourhoods such as Bandra, Juhu and Versova, where developers are assessing the consequences of reduced permissible construction areas.
According to Knight Frank India, Mumbai recorded 72,804 residential property sales between January and September 2026, while developers introduced 72,673 new units. Unsold housing inventory declined 2% to 1,55,473 units.
Kamlesh Thakur, President of Naredco Maharashtra, said the association’s assessment suggests that more than 45 coastal redevelopment projects could be affected, compared with the SRA’s estimate of seven to eight projects. He explained that calculating FSI after deducting reservations, buffers and setbacks could substantially reduce construction potential.
“Calculating FSI strictly on net plot area – after deducting reservations, buffers, and setbacks – leads to a severe 20 per cent to 30 per cent reduction in overall buildable footprint,” Thakur said.
Chintan Sheth, Chairman and Managing Director of Sheth Realty, said the revised permissions do not directly affect his company’s projects but could have broader consequences for housing availability. “FSI is a fundamental input in real estate development, underpinning land valuation, project feasibility, construction planning, saleable area, revenue projections and financing structures,” Sheth said.
He added, “A reduction in development potential along the coastline, where a significant concentration of CRZ-affected projects is located, could constrain new supply,” warning that limited availability could push property prices higher.
Developers are also concerned about project finances. Bhushan Bhanushali, Founder of VB Group, said reduced FSI could make it difficult to recover expenditure on land, rehabilitation, statutory premiums and construction.
“A reduction in permissible FSI can have far-reaching implications for redevelopment economics, as fixed costs relating to land, rehabilitation, statutory premiums and construction have to be recovered from a potentially smaller saleable area,” Bhanushali said.
He added, “This can compress developer margins, affect projected cash flows and necessitate revisions to building configurations, unit layouts and financial projections.”
The revised interpretation has also raised concerns among developers with projects already approved or under construction. Changes could affect sanctioned layouts, homebuyer commitments, financing arrangements and delivery schedules.
Sheth cautioned, “Any mid-course revision to the applicable computation methodology can produce a domino effect, with far-reaching implications for developers and other stakeholders,” while Bhanushali said, “Any subsequent revision could necessitate changes to construction strategies and funding arrangements, potentially affecting project timelines and existing obligations.”
Naredco Maharashtra has called for protecting existing approvals or introducing compensatory FSI provisions. Thakur said, “Naredco Maharashtra strongly advocates for grandfathering existing approvals or offering compensatory FSI mechanisms to maintain investor confidence, protect homebuyer interests, and preserve stability across Mumbai’s real estate ecosystem,” he said.
The BMC was approached for comment but had not responded before publication.
Source: Business World
