Suburban developments: Mumbai civic body gets four warehouse bids

Currently, several warehouses are located in the outskirts.

Three years after slashing premium charges by 90% for constructing a warehouse, the Brihanmumbai Municipal Corporation (BMC) has received four new proposals to construct warehouses in the suburbs.

Civic officials expect India’s position to move up to 50 from the current 100th position. (HT Photo)

Currently, several warehouses are located in the outskirts. The reduction in development charges and abolition of Octroi have attracted developers to build warehouses in the city as demand is growing.

Less premium and speedy online approvals will benefit these proposals, which will help BMC improve its ranking in the World Bank’s doing business report. Civic officials expect India’s position to move up to 50 from the current 100th position.

A senior official from the development plan department of BMC said that a circular with a provision to bring down premium –that builders pay to construct a warehouse in the city – was issued in 2015. However, the proposals were tabled recently.

Ajoy Mehta, municipal commissioner said, “With speedy online approvals and reduction in construction costs, we are aligning rules to make it more business-friendly. We have received proposals for constructing warehouses and the proposal is yet to be processed.”

Considering land prices in the city, the development charges imposed — for scrutiny of the proposal and other premiums — is also high, which leads to increase in property rates. However, reducing the premium will bring down the overall cost of construction.

As per housing experts, due to a slump in residential segment, commercial offices and industrial warehousing have attracted developers. The premium cost of constructing a warehouse on a 1,300sqm plot is ₹11 lakh. Now it will be just ₹1 lakh.

“As per World Bank’s criteria, a warehouse is considered to be valued at 50 times the Gross National Income (GNI) per capita of the country. The GNI per capita of India is around ₹1,08,601 for which, the construction cost must be around ₹50 lakh at current value. But, the cost of constructing a warehouse in Mumbai goes upto ₹2 crore because of the permission charges,” the official said.