>MUMBAI REAL ESTATE: Voids and niches in the Floor Space index(FSI) calculations; Discretionary powers of the BMC Commissioner have been substantially reduced

■ New FSI rules: As per press reports, the Maharashtra government has amended the DCR to include areas like flowerbed, balcony, voids and niches in the FSI calculation. However, official notification is yet to be received on the same. The move is aimed at plugging the earlier loopholes, wherein builders built large flower beds and deck-parking areas to enlarge the project’s saleable area. In the amended rules, an ‘All‐in’ FSI calculation will be applied and the builder will be required to pay a premium amounting to 60% of the ready reckoner rate on the additional 35% fungible FSI to be allowed. For industrial and commercial properties, 80 and 100 per cent premium will be required to be paid.

■ Costs to go up: As per our understanding and interaction with some companies, this amendment will not result in any extra area for the builder, as a typical project would have included ~30-35% areas like flowerbeds, balconies voids etc. (Free of FSI area) which is over and above the normal FSI. However, the builders shall get the flexibility to use this extra FSI for any purpose and thereby, could increase the carpet area.

However, costs are expected to increase as builders will be required to pay a premium amounting to 60% of the ready reckoner rate for availing the extra fungible FSI. As per our initial calculations, (refer to pg 2) without accounting for any changes in pricing strategies, margins could get hit by ~9% on a standard project. However, we believe that since this FSI can be used to increase carpet area, new pricing strategies based on carpet area shall emerge.

■ Provides a level‐playing field to developers: In the earlier system, only a few developers could exploit the loopholes in the system to make abnormal profits. Under the new rules, discretionary powers of the BMC Commissioner have been substantially reduced, paving the way to create a more level-playing field in the

sector.

■ Policy clarity to boost approvals: With the passage of this new policy, a significant positive development would be the resumption in granting of approvals, with emergence of clarity on the policy front. Also, the new rules could provide an impetus to land deals, which were earlier stuck owing to lack of policy clarity on FSI norms.

To read the full report: MUMBAI REAL ESTATE

RISH TRADER