Redevelopment: A Boon or a Bane?
Redevelopment in Mumbai
The availability of land is a major issue in Mumbai. With rising demand, there is a scarcity of vacant land parcels. With a large portion of the city covered with cess and dilapidated structures, experts recommended the state government that reconstruction in Mumbai was the best approach to address the demand and supply mismatch.
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“Mumbai has the largest redevelopment activity, with over 31,000 projects approved as of May 2024. Swapnil Anil, managing director, consulting services, Colliers India, adds that approximately 30% – 40% of the city’s overall projects are being redeveloped.
There are two sorts of projects: Greenfield development on open land and brownfield redevelopment, which involves destroying the current structure. “Homebuyers suffer when a project is stalled, and the agony or difficulty in redevelopment projects are increased. In the case of redevelopment, while the interests of both existing members and new homebuyers are the same — to complete the project as soon as possible — there is generally reluctance among existing members to contribute to the additional expenses to be incurred,” says CA Ramesh Prabhu, chairman of the Mumbai Suburban District Cooperative Housing Federation Limited.
What percentage of a redevelopment project goes to the developer and the tenant?
This decision is made based on several variables, including the project’s size, location, and current market conditions. “Developers usually gain a larger portion of the new development to pay the cost of construction and project management, while tenants receive a piece of the new area as part of their relocation and compensation package. This structure is intended to balance the interests of both parties and promote successful rehabilitation initiatives. In Mumbai’s redevelopment projects, the normal developer-tenant split is 70%-80% of the new development space and 20%-30% for tenants. This split mirrors a general tendency observed in different renovation projects throughout the city.” adds Anil.
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Trouble in Redevelopment Paradise
However, not all redevelopment initiatives meet expectations. Most redevelopment projects fail because the developer lacks funds.
Mohan Pathak, a Mulund (east) inhabitant, had submitted his one-bedroom property to be redeveloped in 2021, with the expectation of receiving a two-bedroom unit after the project was completed. The agreement also stipulated the construction of amenities such as a swimming pool, children’s play area, and gym. “We inked the arrangement in 2019; construction began in 2021. According to the agreement, the project was to be completed in two years. We are already a year late. According to the agreement, the developer had to pay us a set amount of rent and then increase it after a year. We are already eight months late on receiving our monthly promised rents, and the higher rent that he promised to pay has never materialized. As he was paying the rent from the society corpus fund, it went into negative territory, which is not a good indicator,” explains Pathak.
Although the new initiative is MahaRERA register, Pathak and other members of the community are unsure how much assistance they will receive. “Due to a lack of funds, the developer has halt our society’s project, which includes over 200 flats.” If we seek the regulating authority, a new developer may step in, but as homeowners, we may be put in a difficult position and force to take whatever is offer. We still have hope with our current developer, who is attempting to attract some investors. It is only an issue of how much loss he is willing to endure in order to complete this project and pass it over to us.”
What steps can be taken if a redevelopment project becomes stuck?
To begin, gather all documentation relevant to the redevelopment project that can be use as proof, and schedule a meeting with the developer to try to resolve the matter. Next, try to resolve the issue directly with the developer. If this does not work, you can file a complaint with MahaRERA or go to civil court to resolve your issue. It is important to note that you cannot make a complaint in all avenues in the hopes of receiving a resolution from any of them. If you do it this manner, you may face a fine.
Senior citizens should not have to suffer as a result of redevelopment delays. HK Verma’s book ‘Understanding Redevelopment of Housing Societies’ highlights the instance of senior citizen Jayshree Dholi, who’s flat was acquire for redevelopment in 2019. The construction was schedule to be complete in 24 months. The developer failed to pay the rent and provide replacement accommodations, and the society’s officers took no action. The petitioner stated that at her age, she has been without a roof for the past four years. She was accompanied by six other senior citizens. She petition the Bombay High Court to intervene, particularly in light of violations of her fundamental rights under Articles 14 (equality), 21 (life), and 300A (no person shall be dispossess of his property unless by law). The judge conclude that they initially agree with the petitioner that senior folks should not be force to suffer and go without a roof at the end of their lives. The developer and the society were order to give acceptable and enough lodging to the aggrieve parties and compensate them for the inconvenience. They were also instruct to hand up custody of the flats to the senior citizens within six months. The judge imposed sanctions on the developer, society officers, and even the deputy registrar.
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What are the dangers connect with redeveloping a project?
While homeowners may suffer the pain of losing their properties if redevelopment fails, homebuyers who choose to invest in a refurbished project face additional challenges.
“Financial setbacks are a key issue, as buyers risk losing significant investments and facing additional fees if the project fails. Delays caused by regulatory impediments, building issues, or legal conflicts can be extremely frustrating and inconvenient. Legal problems, such as disagreements over property rights and project agreements, can lead to costly and lengthy legal fights. Poor construction and design problems can jeopardize the redevelopment’s quality. Poor communication from developers, combined with poor timing and difficulties in obtaining relevant permits, can exacerbate these issues, making the reconstruction process even more onerous for homebuyers,” Anil adds.
Why do redevelopment projects take extra time to complete?
Bureaucratic impediments
To reconstruct a project, various regulatory procedures such as environmental clearances, zoning rules, and construction licenses must be in place. Any delay in obtaining these clearances can impede progress. Furthermore, with so many stakeholders involved in a reconstruction project – owner, developer, contractor, and government agencies – a minor misunderstanding might lead to significant delays.
Land Acquisition and Tenure Disputes
Once redevelopment has been decide, the next stage is to address concerns such as land ownership, tenant disputes, or encroachments, which may require legal intervention to be resolve. This may make the project take longer to complete.
Financial restrictions
Any delay in acquiring financing for redevelopment projects might have a direct influence on their schedule.
Construction challenges
Engineering and construction delays may occur as a result of unforeseen challenges on the redevelopment site, such as soil instability or the discovery of historic structures during excavation. These will also increase the project’s budget, raising construction expenses and, as a result, purchasing costs.
Market Conditions
Any changes in the financial market will have an effect on the real estate industry. A recession has a significant impact, and projects such as redevelopment are typically among the first to be affect.
Guidelines for selecting a developer when homeowners choose to redevelop
When selecting a developer for your redevelopment project, consider reputation, experience, heritage of successful project completion, technical merit, construction quality, and financial capability. “Reputable developers will make every attempt to execute the job on schedule. Prabhu argues that a reputable developer can get simple finance while also selling their products.
Landmark projects being renovate in Mumbai
- Adani Realty plans to rehabilitate the Dharavi slum.
- The BDD chawl reconstruction in Worli, one of Asia’s largest cluster redevelopment projects. It will be complete in phases, with Tata Projects Limit, Capacit’e Infraprojects Limit, and Citic Group Consortium receiving the order. Mhada is the project’s nodal agency.
Navimumbaihouses.com Point of View
When a project is redevelop, the bulk of the owners are retire. It may be living on the monthly rent provide by the developer under the terms of the agreement. Because of the developer’s error, if these rents halt. It will be devastating, particularly in a city like Mumbai. Which is one of the most expensive real estate destinations in the world. In some circumstances, people have been force to leave their rental residences and rely on their children since their property has being redevelop with no clear schedule for delivery. A house is more than just a structure; it is an emotional home for most of us, and giving it up for an update and never hearing about it is both financially and emotionally devastating. When the property is deliver to the developer for renovation. One should have complete confidence in the developer and investigate possibilities for what to do if things go wrong right away, so that there is a backup plan in place.
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