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Boon for builders

Print edition : Oct 24, 2008 T+T-
The Mumbai skyline. After the Supreme Courts ruling, many more skyscrapers may come up.-PICTURES: VIVEK BENDRE

The Mumbai skyline. After the Supreme Courts ruling, many more skyscrapers may come up.-PICTURES: VIVEK BENDRE

The Supreme Court order clearing the way for the redevelopment of 19,000 Mumbai buildings thrills builders but leaves citizens shocked.

FOUR months ago, Hindi film actor Vinod Khanna bought a 2,500-square-foot (1 sq ft is 0.09 sq metre) apartment in Mumbais Malabar Hill for Rs.30 crore. Khanna set a record of sorts in the city, whose real estate market had yet to recover from the Rs.34-crore sale of an apartment on Marine Drive. The sales of these apartments, say realty experts, are not unique cases. These are the prices luxury apartments in the city command. Regular-to-lower-segment residential and commercial space is not that far down the pricing ladder. Undoubtedly, the citys property value is among the highest in the world.

So, when the Supreme Court recently cleared the way for the redevelopment of 19,000 dilapidated cessed buildings in Mumbai, it was a bonanza for builders. Stating that the over two lakh people whose families have lived for generations in these cessed buildings deserve new and safer homes, the apex court relaxed the number of approvals builders were required to get and allowed an increase in the floor space index (FSI). The ruling is expected to have an impact on real estate prices. It is believed that the demolition of these buildings will open up land on the island, thus bringing a much-needed correction in the prices.

However, concerned citizens are stunned by the judgment, which, they believe, only builders will benefit from. In fact, the increase in construction will put a huge strain on the citys infrastructure. There have been instances in the past when cessed buildings were demolished, and even though the same resettlement rules for tenants applied, none of the original tenants was given what was promised. Furthermore, the ruling reduces the open space buildings are required to have. This is catastrophic for the environment, the citizens say.

The Supreme Court overruled a Bombay High Court stay on the demolition of the cessed buildings. It also waived all the restrictions imposed by the High Court, such as compulsory provision of open space and getting additional approvals from the Maharashtra Housing and Development Authority (MHADA). The Supreme Court ruling says that a builder has to give the current tenant a minimum of 225 sq ft on the same property. In exchange, the builders will get double the FSI. For instance, a three-storey building could become a 10-storey complex. Even after giving the original tenants apartments, the builder would have at least seven storeys to sell and profit from.

A cessed building in Mumbai is one that was built before 1940. The State has taken it upon itself to see to it that these buildings are repaired and, wherever necessary, reconstructed. For that purpose, it created the Bombay Building, Repairs and Reconstruction Board by passing the Bombay Building Repairs and Reconstruction Board Act (1969). This Act was later repealed. The activities under the Act were taken over by the MHADA when the Maharashtra Housing and Area Development Act was passed in 1976. Under Section 82 of the Act, a cess, known as the Mumbai Building, Repairs and Reconstruction Cess, was to be contributed by tenants of private buildings.

According to an MHADA survey, there are close to 20,000 cessed buildings in Mumbai although only 19,000 will go under the hammer now. Most tenants of cessed buildings pay rents that were frozen at the 1940 rates. There have been revisions but the increases were marginal. For instance, in an area such as Gamdevi in South Mumbai, where a two-bedroom flat commands a rent anywhere between Rs.40,000 and Rs.1 lakh a month, a rent-control tenant could pay as low as Rs.300. In areas such as Fort, which is the business hub of the city, tenants are known to pay just Rs.50 a month.

Since landlords get paid so little, they have no interest in maintaining buildings and several of them are on the verge of collapse. In order to do something as many lives were in danger and the property market was booming, the State government introduced the Development Control Regulation Sec 33 (7) in 1991. But property developers showed little interest as the High Courts criteria for redevelopment and resettlement were strict. For instance, the High Court made it compulsory to keep 30 sq ft of open space when the building was redeveloped. The regulation was amended in 1999 to accelerate development, but even this was met with little enthusiasm as the High Court held on to the stringent rules.

At least six cessed buildings have caved in, in the past two years, killing about 50 people. Following an outcry from citizens over the collapsing buildings, the MHADA carried out a survey of dilapidated properties. The State came out with a new policy in June, which stated that if builders took up the reconstruction of a cessed building in a cluster format, which meant integrating the land of two or three neighbouring cessed buildings and putting up one big construction, they would be given an FSI of up to 4 as against the present 1.33.

A public interest petition was filed against this policy, and the High Court put a stay on it. With the Supreme Court clearing the way again, the citys future and peoples lives are in absolute jeopardy, says Cyrus Guzdar, who is leading a citizens awareness campaign on the ruling. Unless a review petition is filed, very little can be done now, says Guzdar. Non-governmental organisations and citizens groups are attempting to get a campaign off the ground, but it will be a hard battle.

Real estate in a city like Mumbai is controlled by a cartel of powerful builders who have easy access to politicians and the administration, says Chandrasekhar Prabhu, an architect and urban planner involved with the citys development. He knows of three cessed buildings that were rebuilt and have none of the original tenants living in the newly constructed building. Builders pay them vast sums of money to give up their rights. If you give one crore to a family who has been living in one-room tenement-type housing, its a huge amount and the tenant is happy to give up his rights. Since there are no checks on occupancy, the builder merrily sells to whoever can pay the market price, says Prabhu. Much later, the tenants realise that while the money is good, it only gets them a property in some northern suburb, from where they have a one- to two-hour commute to make to their workplaces.

Mumbai is going to resemble a big construction site soon, says Pankaj Joshi from the Urban Development Research Institute. There is no big-picture plan. These piecemeal policies are going to be disastrous for the city.

Joshi says the Supreme Court ruling allows buildings to come up within 5 ft of each other. Additionally, the open space has been reduced drastically from 30 sq ft to 1.5 sq ft. This is a sure fire hazard. If hygiene is not maintained, epidemic and disease could spread. What happens to the green space and open areas for the city? It will just be one big concrete jungle.

Mumbai has a total land area of 600 sq kilometres as opposed to a city like Delhi, which has 1,483 sq km. Property prices are as high as they are mostly because Mumbai is an island city that cannot expand. It can at best develop northwards. Delhi, on the other hand, can expand in all directions. The only way to reduce the pressure on Mumbais housing is vertical development. The government has realised this, yet it just does not have the foresight to put together a more comprehensive plan, says Joshi.

Up to now, about 1,000 buildings have been sold. This entire process will take a bit of time, says real estate broker Usha Thakkar. She says there are lots of ifs and buts, and almost 40 sanctions are still needed before a project can come up. Within the island city, some areas are more sought after than others. Builders will zero in on spaces that will get them a good price. The more congested and lower income areas will see little development. Usha Thakkar says it is a win-win situation for builders. Some tenants do try and bargain with the developer for more space. But the rules say that if 70 per cent of the occupants agree to the deal, then the others have to agree or they will get thrown out.

Two generations of Ramesh Thakurs family have lived in a chawl in Gamdevi. Chawls are the traditional double-storey 100-sq-ft-a-room tenements scattered across the city, which used to house millworkers. Thakur, a tailor, works out of this little room. His wife and daughter live with him. The chawl has common toilets, and a kitchen is built into each room. Propped up with wooden and steel poles, Thakurs chawl definitely needs to be reconstructed. Every monsoon, the residents fear that it will collapse.

Thakur recently accepted an offer from a prominent Mumbai-based builder to give up his rights in the chawl in exchange for a 250-sq-ft apartment that will have its own bathroom and a separate kitchen. The builder has told him he will shift Thakur to the building next door to the chawl and will then bring down the chawl and construct the new property. The building into which Thakur is supposed to move temporarily is still incomplete. He is positive that the deal is clean and that he will have a better place very soon. Others, he said, took the money and left. I am certainly not going to move from here.

It can only be hoped that he gets what is rightfully due to him.