South Mumbai, renowned as the most expensive property market in the nation, faces a transformative shift. This change is driven by a Supreme Court ruling that facilitates the redevelopment of the entire city, with significant repercussions expected in South Mumbai, known for its aging, crumbling mansions.
The apex court's directive promises to unleash vertical expansion in a city that yearns for additional space, though it also raises concerns about further straining Mumbai’s already overburdened infrastructure.
On Thursday, the Supreme Court endorsed the Maharashtra government’s development control rule 33(7), abbreviated as DCR, which permits developers to utilize three to seven times the Floor Space Index (FSI) when redeveloping old, cess buildings scattered throughout the city. The Floor Space Index determines the maximum extent to which a parcel of land can be developed.
This ruling effectively concludes a long-standing legal dispute over a highly contentious matter in Mumbai.
Roughly 19,642 aged, cess buildings in South Mumbai are now poised for redevelopment—an opportunity that could prove lucrative for various builders. However, it remains uncertain whether the impending influx of properties will significantly influence property values. Even though housing markets across numerous cities have plummeted, the scale of price adjustment in Mumbai has been rather minimal.
Under the revised rules, developers may receive as much as 2.5 or even higher FSI for the redevelopment of chawls erected prior to 1940. For chawls built after 1940, developers will gain a 50% increase in additional FSI for rehabilitating existing tenants as a compelling incentive.
The building community is optimistic that this Supreme Court ruling will unlock substantial housing inventory and ultimately help alleviate property prices. "This was one of the biggest hurdles in Mumbai’s development. Now, with the Supreme Court resolving this matter definitively, the city will have as much as 200 acres of land available for redevelopment in the next decade. It marks a major milestone," remarked Ram Yadav, Orbit Corporation's director of finance.
"The builders aren't the only beneficiaries; residents from Mumbai's congested suburbs such as Thakurdwar, Zaveri Bazaar, Chira Bazaar, and Grant Road have been eager for the implementation of these regulations. The Supreme Court's backing will provide much-needed relief for countless inhabitants of aging, dilapidated buildings," stated Rajesh Vardhan, managing director of Vardhman Group, a company active in the housing redevelopment sector.
The current developments trace back to a state amendment of DCR 33(7) made four years ago, granting considerable discretion to builders during redevelopment. Although the necessity for redevelopment has been broadly acknowledged, many have expressed concerns regarding the manner in which the state government altered existing regulations.
Some activists within the city fear that this action could precipitate unregulated development across the island city. Former Mumbai municipal commissioner JB D’Souza, along with Cyrus J Guzder and Shirish Patel, contested the state's decision in a public interest litigation at the Bombay High Court.
The petitioners contended that the modified rules would enable builders to redevelop even strong and relatively new buildings. “This will inevitably exert tremendous pressure on crucial infrastructure such as transport, water supply, and sewerage,” they argued, urging the Bombay High Court to annul the amended DCR 33(7).
The petitioners additionally called for the establishment of an expert panel to assess whether redevelopment is warranted solely for dilapidated and structurally unsafe properties.
The previous Chief Justice of the Bombay High Court, Dalvir Bhandari, along with Justice DY Chandrachud, endorsed the petitioners' argument, issuing an interim halt on all redevelopment undertakings encompassed by DCR. They also mandated the creation of a structural committee comprising three engineers to evaluate "weakened" structures and determine their need for redevelopment. The recent Supreme Court verdict will now challenge the status quo set by these earlier judicial findings.