HindustanTimes Thu,30 Oct 2014

Now, pay less to build more

Naresh Kamath, Hindustan Times  Mumbai, February 28, 2011
First Published: 01:12 IST(28/2/2011) | Last Updated: 01:13 IST(28/2/2011)

In a development that could provide some relief to home buyers as builders will pay less to build more on a plot, the rates of the much-sought-after transfer of developmental rights (TDR) have come down over the last one month.


This is in anticipation of the government allowing builders to buy premium floor space index (FSI) of 0.33 directly from it in the suburbs.

The rates of TDR – which is the extra construction a landowner or developer is allowed for surrendering land for public projects --  have fallen to Rs. 2200- Rs. 2800 per square feet range from Rs. 3500 a month back.

Market sources said a major realty firm in Goregaon has purchased TDR of 90,426 square feet at the rate of Rs. 2,100 per square foot.

The state is all set to allow builders to purchase premium FSI – the ratio of the built-up area to the total area of the plot -- of 0.33 from it in the suburbs, thus reducing their dependence on market forces.

For, the builder will have to purchase just 0.67 FSI instead of 1 from private parties for undertaking any project in the suburbs.

The matter is awaiting the nod of chief minister Prithviraj Chavan.

Sunil Mantri, President, Maharashtra Chambers of Housing Industry (MCHI), told the Hindustan Times that said this move would spur growth.

“The high TDR rates quoted by private parties had dissuaded many builders from taking up projects in the suburban areas. The state’s move on premium FSI will force many to reduce prices further,” said Mantri. 

“There may be some areas where the builders may reduce costs,” Mantri added.

The premium charged by the state for FSI would be in the range of Rs. 700- Rs. 2300 as it is based on the ready reckoner of that particular area.  

TDR is generated when landowners or developers surrender land for a public purpose.

In return, they get the right to construct a proportionate area to the north of the plot surrendered.

The TDR market is controlled by a cartel consisting of some major builders who jack up the prices in unison.

According to real estate experts, the reduction in rates is linked to sales in the retail market.

“There is a drop in sales of apartments and there is also a huge inventory of unsold houses with the builders, which has resulted in low demand for TDR,” said Pranab Datta,

Vice Chairman and Managing Director, Knight Frank India Limited, a leading real estate consultancy firm.

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