Mumbai's old housing societies look to private developers instead of self development

Mumbai: Owing to the great pace at which mass urbanisation is taking place in India's foremost city Mumbai, the demands for more housing looks perpetually rising against the geographic reality of limited land being available for such housing projects. Mumbai has always been a thriving commercial hub for as far back intime as most readers will recall but the present situation can only be described as the coastal city bursting at the seams.

Housing redevelopment has taken centre stage in the government's policy making agenda in hopes to drive growth in thehousing sector and provide much needed relief to people in dilapidated and old buildings. However, redevelopment is neither an ordinary nor a simple task, itinvolves a multitude of financing, bureaucratic work, research and planning toimplement it to good effect. When the hopes of all of the society's members hangin the balance in such projects, any and every fine detail can make a bigdifference.

Redevelopments can revive Mumbai

The city is home to people from all walks of life, engaged in all possible vocations, hailing from all parts of our diverse country. People outside the city wish to livehere at some point in their lives, for some among the nation's poorest categories, just getting here is the end all be all. For them, Mumbai is nothing short of a city of dreams, as for those who actually live here know for a fact that Mumbai is waytoo cramped to be anything of that sort. The rapid upward climb of real estate prices fueled mostly by a lack of free space inside the city can lead to a multitude of problems for the city's future. If allowed to grow unrestricted, house prices can get to a price point where families would rather move out of the city for greener grass in Bangalore or Indore or perhaps a nascent smart city in the state (Thane, Pune, Kalyan).

State government's push for redevelopments

Housing redevelopment is both a reform as well as a financial opportunity for old co-operative societies that wish to heed to the sign of the times and answer the call of the city's housing issue. A combination of factors, namely, risk posed by aging buildings and growing demands for more houses has caused the state government to be much concerned with redevelopment projects and so much so that they're actively motivating old societies to undergo redevelopment with tax relief as well as interest rate cuts. Some 30,000 buildings will undergo redevelopment in the next few years in the western suburbs of Mumbai.

The committees of these buildings will be advised on their redevelopment plans bythe state government through Maharashtra Housing and Area Development Authority (MHADA), the supreme authority in regard to housing redevelopment in the city. MHADA will provide architects, contractors, project managers and the Reserve Bank of India will provide credit through housing finance companies. A successful redevelopment project creates a win-win for all three parties involved, the society, the developers and the banks and on the other hand a stalled or ineffective redevelopment can cause all three partiesto lose money by the crores.

Why societies prefer private housing redevelopers

To move along to the next step, societies then decide whether they wish to redevelop the buildings themselves or to make a deal with a builder to do the redevelopment on their behalf. It is extremely important for a society's membersto know exactly what the project demands of them if they intend to opt for self-redevelopment. In all other cases it would be the more pragmatic and realistic choice to go with a reputed private developer who has credible experience in redevelopment projects. Teaming up with a private housing developer implies that the developer recognises monetary gain in the sale of additional flats created through the redevelopment project.

What this means is that the society and the developer both have a vested interest in seeing through the redevelopmentproject to its finish line. If in case the project does not succeed in increasing thecommercial value of the building, the society as well as the builder stand to lose a lot of money, time and effort. Several recent incentives provided by thegovernment so far as well as the ones proposed to arrive in the near future havemade redevelopment of Mumbai's thousands of old societies into a lucrative opportunity for all involved.

A botched redevelopment effort through self-redevelopment not only makes this amazing chance for extra cash and space but also leaves the people without much of a recourse if it happens. On the otherhand, in case a redevelopment project with a private housing developer is deemed to be unsatisfactory by the society, it is not uncommon to see them takelegal action against that developer or appoint a new developer altogether.

(The author is the Vice President of Brihanmumbai Developers Association)