TDR rate shoots up, hits redevpt projects

Mumbai: A sudden spike in transfer of development rights (TDR) rates from Rs 2,500 a sq ft to over Rs 4,000 in the past two months has jeopardised redevelopment projects in the suburbs.      The phenomenal increase, attributed to a few players who control the roughly Rs 2,000-crore-ayear TDR market, has forced many builders to renegotiate deals with housing societies or put them on the backburner. TDR is an important component for builders redeveloping suburban properties because it doubles the built-up area over and above the usual FSI permitted on the plot. But builders wanting to buy it from the market are now finding it increasingly unaffordable. TDR stocks low, rates may go up to 5,000 per sq ft  Mumbai: The skyrocketing transfer of development rights (TDR) rate is likely to go up further from the current Rs 4,000 asq ft rate.      "The rate may jump to Rs 5,000 a sq ft in the next one month because no TDR is being generated from slum projects," said an industry source.      "Since the last three months, every week has seen an increase in TDR prices. This has made redevelopment of societies unaffordable and unviable," said Nayan Shah of Mayfair Housing.      He added that if TDR rates continued to escalate and the state government failed to intervene, redevelopment projects will come to a grinding halt and apartment prices will increase.      Sources said the total stock of TDR is currently barely 10 lakh sq ft against the annual demand of about 70 lakh sq ft. Most of the stock is held by just two builders, D B Realty and RNA. These two construction firms are some of the biggest slum redevelopers in the city who generate TDR by building tenements for slum dwellers or project-affected persons free of cost. As compensation, they receive additional construction rights in the form of TDR. They can either use this TDR themselves to build anywhere north of the slum plot or sell it to another developer.      Hiren Patel of Atithi Builders and Constructors said his slum redevelopment project in Mahul will generate over one crore sq ft of TDR. However, Hindustan Petroleum Corporation Ltd (HPCL) has objected because the project is close to its refinery.      Two years ago, the state issued an ordinance to break the monopoly of the handful of builders and traders who control the TDR market in Mumbai. To discourage cartelisation, it ruled that developers could now buy 33% of the required TDR from the government at a much cheaper rate than available in the open market. It is the remaining 67% controlled by a few at a phenomenal cost that is causing heartburn in the construction industry.      The Maharashtra Chamber of Housing Industry (MCHI) recently urged the state government to increase its cap from 33% to 67% to further loosen the grip of private TDR suppliers. The government's TDR rate, which is fixed on the ready reckoner rate of an area, is currently available for between Rs 1,500 to Rs 2,500 a sq ft, which is 80% to over 100% cheaper than the market rate.  WHAT IS TDR? T he transfer of development rights (TDR) policy was launched in 1991 to decongest the island city. Owners whose plots were marked for playgrounds etc or whose land was needed for road-widening, could surrender it and get an equal amount of space in the suburbs. Slum TDR was introduced in 1997. Builders redeveloping slums for free receive slum TDR, which can be used north of the scheme. For instance, if a slum is edeveloped in a non-prime area like Trombay, the builder can utilise the TDR in upmarket Bandra (west), which falls north of Trombay on the map.      WHAT IS FSI? F SI refers to the buildable area on a plot of land. An FSI of 1means the area of construction should be equal to the area of the plot. For example, a plot of 10,000 sq ft can only have a built-up area of 10,000 sq ft and no more. FSI for Mumbai suburbs is 1, but another 1 FSI can be loaded by buy