Property developers with projects in suburban Mumbai will be more dependent on TDR (Transfer of Development Rights) purchases from the market for achieving FSI (Floor Space Index) limits now more than ever. This is bound to push up TDR prices,
according to a press release from Jones Lang LaSalle Meghraj.
Mr Ashutosh Limaye, Associate Director, Strategic Consulting, JLLM, said in the release, this follows a stay by the High Court on the Government order providing for developers to purchase premium FSI from the Government. A few months ago, the Government had introduced an additional FSI of 0.33 that could be purchased from the Government for properties located in suburban Mumbai. But this has been stayed for now through a court order. Though developers can still avail themselves of an FSI of 2, the loss of the option to buy from the Government will mean they are entirely dependent on market purchases of TDR, he said.
Earlier, the Government order meant that apart from the inherent FSI of one and 0.67 FSI that could be purchased from the market, the developers could buy 0.33 FSI from the Government to be able to provide a built-up area of FSI of two. Now to achieve an FSI of two the owner/developer has to buy TDRs entirely from the market as premium FSI is no more available.
This will result in increased demand for TDR and a likely increase in prices. Eventually, it means an increase in cost of projects, meaning increase in real estate prices. While the premium FSI was decided by the Government and thus known and fixed, the TDR sale and purchase is a market phenomenon. Thus the prices are variable depending on location of TDR generation and location of TDR deployment. Thus, there is a degree of uncertainty in pricing that will be added, says Mr Limaye in the release.
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