More supply and a possible fall in prices. That is what is in store for Mumbai's property market. The Maharashtra government has increased the FSI or the permissible developable area in suburban Mumbai from 1 to 1.33.
That means developers would be able to build an additional 33% on a given plot of land from the suburb of Bandra up to Mulund and Dahisar.
But developers have to pay for the additional
However, prices based on the Ready Reckoner are lower than the existing premium paid for transfer of development rights or TDR. This is traded by private developers at a premium to increase the buildable area in Mumbai's suburbs. Therefore, the premium on transfer of development rights could come down.
However, there is a further catch to this. The FSI in suburban Mumbai already has a cap of 2 with the use of TDR. This cap will remain at 2 irrespective of the government raising the base FSI to 1.33. This means that the TDR could reduce and eventually, property prices could come down.
(via Moneycontrol.com)
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