How Effective Have Devendra Fadnavis’ Revamped Real Estate Policies Been?

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Maharashtra Chief Minister Devendra Fadnavis, who also holds the urban development portfolio, has taken a series of steps to boost the state’s real estate sector, particularly in Mumbai, after coming to power in 2014.

From being the first state to roll out the new housing regulator to lowering consent requirement for redeveloping old dilapidated buildings, Fadnavis’ efforts have both won him praise as well as criticism.

BloomberQuint spoke to experts and activists to get their perspective.

 Lower Consent Threshold For Redevelopment

For decades, consent has been the toughest obstacle to redevelop old buildings in the state. Mumbai alone has nearly 20,000 dilapidated structures, many of them at prime locations, but lack of consensus among residents meant that the buildings could not be pulled down and built afresh.

To tackle the hurdle, the chief minister told the assembly on July 31 that the government would amend the Maharashtra Apartment Ownership Act to bring down the consent requirement to 51 percent from 70 percent.

Lowering the threshold is the only way to revive redevelopment projects, said Anuj Puri, chairman of Anarock Property Consultants.

Redevelopment projects often faced delays and builders didn’t deliver what was promised. Residents’ concerns over builders not handing over projects on time and diverting funds would be taken care of by the new Real Estate Regulation Act, Puri had earlier told BloombergQuint. “Under RERA, there are severe penalties.”

Higher FSI For Redevelopment

To incentivise developers for taking up redevelopment projects in Mumbai’s suburbs, the state said in June that it would revise development control rules to increase floor space index to between three and four for these neighbourhoods. FSI is the ratio between the built-up area and the area covered by the plot on which the structure stand. A higher FSI allows a builder to add more floors while rebuilding an old building. The Fadnavis-led urban development department is considering a policy on this.

“This is important for the future of dilapidated buildings,” said Ashutosh Limaye, head of research at property consultant JLL India.

The decision also raised concerns over limited urban resources. Higher FSI could be an additional burden on the city and its infrastructure. “Already, the existing infrastructure is not able to support the exploding population,” said Pramod Dabrase, director at the Centre for Sustainable Environment and Development Initiatives.

No Delay In Housing Regulator

Maharashtra was the first state to implement the Real Estate Regulatory Act, a law passed by Parliament to ensure transparency and protect interests of homebuyers. The chief minister did not give in to the demand of developers to extend the deadline for registration of ongoing projects. According to a tweet by the Fadnavis’s office, 2,100 developers and 4,682 housing projects had enrolled for RERA as on July 31, the last date.

“The biggest achievement is to make RERA active and operational,” said JLL’s Limaye. Especially when 11 states are yet to notify final rules and only four have a permanent regulator, Edelweiss Research said in a report.

Plan To Free Up Salt Pan Land

The Fadnavis government asked the Mumbai’s development authority to prepare a plan to free up salt pans for housing development. Last week, the Brihanmumbai Municipal Corporation cleared the Development Plan 2014-2034, the city’s blueprint, paving the way for unlocking the natural salt-making pits. Mumbai and its nearby areas have nearly 2,177 hectares of salt pans, of which 256 hectares can be developed, according to state-run Mumbai Metropolitan Region Development Authority.

It’s a big measure that the chief minister can take to boost housing development, said Niranjan Hiranandani, managing director of Mumbai-based Hiranandani Group.

Environmentalists don’t agree. Salt pans, they say, act as a natural barrier for areas near sea shores from flooding. “Opening salt pans would be a blunder,” said Dabrase of CSEDI. Natural habitats such as salt pans, mangroves and forest must be protected at all costs, he said. A city like Mumbai needs development and infrastructure, but unlocking salt pans could lead to potential danger, he said.

Stalin Dayanand of Vanashakti, a non-government organisation, said Fadnavis has tried to bring some order into the real estate industry by safeguarding customers’ interest but has failed on the environment regulatory front.

Infrastructure Support To Real Estate

Hiranandani said the biggest positive story for the Fadnavis government is infrastructure, referring to clearances for the metro projects, Navi Mumbai Airport project and the coastal road. Faster and efficient connectivity will spur real estate growth across the city, he said. “When you do the infrastructure, you will be able to reach out much more (for real estate). All the areas will have a bigger reach.”

BloombergQuint
SOURCE: https://www.bloombergquint.com/business/2017/08/09/how-effective-have-devendra-fadnavis-revamped-real-estate-policies-been
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