Mumbai's stalled building projects: Is self-redevelopment the real solution?

Checks and Balances: Geetanjali Minhas and four sector experts discuss the vexed problem of residential projects on hold, locking out prime land as well as finances

GN Bureau | August 11, 2022


#construction   #land   #RERA   #Maharashtra   #Mumbai   #housing  


Land in Mumbai city, which is surrounded by water on three sides, is scarce and has a premium.

Property prices in certain areas of financial capital of the country are as much as Rs 1 lakh per sq ft. Yet, 5,800 buildings have been lying in a stalled condition for the last 18 years. Meanwhile, 1,25,922 families, ie, 7 lakh people in Mumbai city were pushed to live on streets more than a year ago, as per the Maharashtra government. And the numbers have only increased since then.

After the National Capital Region (NCR), Mumbai has the maximum number of stalled and incomplete residential projects.

With builders cornering huge tracts of land, the stalemate has not only spoilt Mumbai's skyline, but also locked its precious land indefinitely.

In the latest edition of ‘Checks and Balances’, Geetanjali Minhas spoke to sectoral experts and stakeholders who said that as much as availability of finance is a problem for builders; diversion of funds and greediness on part of errant and greedy builders and residents had led to projects getting stuck indefinitely.

Watch the debate here: https://www.youtube.com/watch?v=Ra6sWtruxQk

R A Rajeev, Former metropolitan commissioner, MMRDA, and former commissioner, Thane Municipal Corporation, said that financial mismanagement on part of residents and developers, disagreements, different clearances and planning authorities, rent-seeking behaviour of tenants and residents and many other problems lead to projects getting stalled.

Niranjan Hiranandani, co-founder, Hiranandani Group and vice chairperson, NAREDCO, said that approvals, markets and capital are issues in most stuck projects. He said cash flow is an issue in most stalled projects and at least 25% of such cases can be taken up by structured corporate companies, provided the developer is ready and approvals are in place and there is agreement among the residents.

BJP leader Kirit Somaiya said that in most cases, due to fraud, forgery, willful defaults etc, projects may land in courts. Courts put stay on such projects or in other cases investigation agencies may take up such cases. He said such cases have led to a criminal waste of assets and land.

On massive unsold inventory with the developers in South Mumbai alone, advocate and consumer activist Anand Patwardhan said that with over 90,000 unsold projects lying unsold, under the prevailing situation the builder will prefer to stall the project rather than construct free homes.

Hiranandani added, “Whenever the markets go down, requirements of capital go up.” He acknowledged that the saleabilty of apartments with the developers has come down.

Rajeev said that housing is an imperfect market with a mismatch in demand and supply. Inefficiency creeps in with rent-seeking behaviour and expecting more money. He called for direct intervention of the government in housing to resolve existing problems.

However, Somaiya countered saying the government's job is to formulate and implement policies. He said 95% of land in Mumbai is governed by BMC.

Somaiya further said that world over rental housing is the emerging trend and added that unsold inventory of over 1 lakh homes in the city of Mumbai should be given for rental housing.

He also said that in cases of defaults by builders, financial institutions can take over such projects and give them on rent.

While the RERA Law was ushered in 2017, it applies to the new sale component and does not apply to redevelopment of old and dilapidated buildings of MHADA, SRA, cooperative housing societies and staff quarters where the residents are cheated by builders.  

On this, Hiranandani said most redevelopment projects are under SRA or redevelopment under RERA and the authority is empowered to intervene and sort the issues. He observed that many problems have been sorted by conciliation panels even as he added that complex problems require intervention of all stakeholders.

However, Patwardhan countered saying in his own experience he has seen that unlike the Consumer Protection Act, the RERA is a builder-oriented law and does not penalise the errant builder or ever help consumer to get his flat for which he has already paid.

As a solution to come out of this impasse, the experts unanimously voiced for self-redevelopment.

Calling it a wonderful concept , Patwardhan said that with a project management consultant on board along with a lawyer, architect and a chartered accountant, the society can take all benefits which otherwise would be taken away by the developer. Now with banks giving loans to members for self-redevelopment keeping the land mortgaged implementation should not be a problem anymore.

Somaiya too encouraged consumers to opt for self-redevelopment and observed that greed on part of both the consumer and the developer have led to stalling of projects. He said the legislature, judiciary, regulator and builders associations have to come together for pushing the concept. He assured that he would personally discuss the issue with chief minister Eknath Shinde and deputy chief minister Devendra Fadnavis to formulate a policy with a time-bound action plan with a monitoring group on a war footing.
 

Comments

 

Other News

‘MAGA’ + ‘MIGA’ = ‘MEGA’ partnership for prosperity: Modi

Prime minister Narendra Modi has linked the dream of a Viksit Bharat with US president Donald Trump’s slogan, ‘Make America Great Again’, or ‘MAGA’, saying that when these two democracies work together, i.e. ‘MAGA’ plus ‘Make India Great Again’ (‘

ONOE: Anti-federalism or pro-reform?

The government`s move to implement ‘One Nation, One Election’ (ONOE) has ignited widespread debate. On one hand, it offers tangible benefits, such as removing the possibility of a governance paralysis and reducing election costs. On the other hand, the opposition and sections of civil society s

PM Surya Ghar: Muft Bijli Yojana completes first year

On February 13, 2025, the PM Surya Ghar: Muft Bijli Yojana (PMSGMBY) will mark its first anniversary, celebrating a year of empowering households with affordable solar energy and accelerating India’s transition to a sustainable future. Launched by prime minister Narendra Modi on Febru

How to leverage AI to solve urgent global issues

The world seems to be hurling towards World War III in all the possible scenarios: hot war, cold war, and proxy war. The battleground seems to have expanded beyond physical to digital or virtual/mixed reality with technology like drones. Moreover, the line between civilian and military targets seems to hav

Budget: Progress towards SDGs and areas for improvement

The Union Budget 2025-26 outlines India`s vision for economic and social growth while also reflecting the country`s commitment to sustainable development. As India moves closer to the 2030 deadline for the United Nations’ Sustainable Development Goals (SDGs), this budget presents a balanced approach

Repo rate cut by 25 basis points to 6.25%

The Reserve Bank of India has, for the first time in five years, reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.25% with immediate effect. Consequently, the standing deposit facility (SDF) rate will stand adjusted to 6.00% and the marginal

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now



Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter