Why Developers Are Rushing to Redevelop Mumbai’s Aging Buildings: A New Era in Real Estate

Mumbai’s real estate landscape is changing fast, and developers from across the country are eyeing the opportunities. With the scarcity of land and the promise of upcoming infrastructure projects like the Coastal Road and Metro Phase 3, redeveloping old buildings has become the golden ticket for developers. But why is there such a rush for redevelopment projects, and why are even developers from cities like Bengaluru entering the fray?

Let’s take a closer look at the growing trend that’s shaping Mumbai’s real estate future.

The Draw of Redevelopment in Mumbai

Mumbai is a city with limited space and endless demand. Many of its buildings, especially in prime locations, are aging and no longer meet modern standards. But with the land in such short supply, these old structures are being seen as opportunities. By redeveloping them, developers can build modern apartments that cater to today’s urban dwellers while offering homeowners upgraded homes with better infrastructure.

Last week, Bengaluru-based real estate giant Puravankara Limited announced that it had secured redevelopment rights for Miami Apartments in Breach Candy, one of South Mumbai’s most coveted areas. Puravankara also revealed plans to redevelop four more societies in Andheri, a bustling suburban area. These moves come as no surprise given that property prices in Breach Candy range from ₹1.25 lakh to ₹1.40 lakh per square foot, making it an attractive proposition for both developers and homeowners.

Not just Puravankara, but major players like the House of Hiranandani are also making significant investments in Mumbai’s redevelopment scene. The company has announced an investment of ₹3,200 crore to redevelop five housing societies in Chembur. These projects span 17 lakh square feet, with a gross development value (GDV) of ₹5,000 crore.

Why Redevelopment Is Gaining Momentum in South Mumbai

Redevelopment projects in South Mumbai are particularly noteworthy. This part of the city is home to some of India’s most expensive real estate, and while the buildings are old, the land they occupy is extremely valuable. Real estate experts attribute the surge in redevelopment activity to the Maharashtra government’s decision to halve premiums on real estate projects post-COVID-19. This policy move was a game-changer, incentivizing developers to focus on the city’s aging structures.

Pankaj Kapoor, Managing Director of Liases Foras Real Estate Rating and Research Pvt Ltd, explains that the announcements we’re seeing today are likely the result of projects that were in the works for the last few years.“From 2016 to 2021, the Mumbai real estate market was under stress with little supply. But after the pandemic, the government’s premium waiver gave a much-needed push to the redevelopment of old buildings,” he said.

Kapoor further noted that with little open land available, redevelopment will be a significant driver in Mumbai’s real estate market over the next decade.

How Infrastructure Projects Are Boosting Redevelopment

The ongoing and upcoming infrastructure projects in Mumbai are also playing a pivotal role in the rise of redevelopment. The partial opening of the Coastal Road and the development of the Metro-3 corridor (connecting Cuffe Parade to Aarey Colony) are expected to drastically improve connectivity within the city. This has sparked renewed interest in redeveloping older buildings, particularly in South and Central Mumbai, as improved infrastructure will make these areas even more desirable.

Real estate experts believe that the Coastal Road and Metro-3 will boost activity in areas like Nariman Point, Cuffe Parade, Churchgate, and Worli. Even suburban areas like Bandra, Andheri, Malad, and Borivali are expected to benefit from better connectivity with central and southern parts of the city.

What Redevelopment Means for Homeowners

For homeowners, redevelopment offers a chance to upgrade their living conditions without having to relocate to a new part of the city. Under a typical redevelopment model, developers promise homeowners extra space and modern amenities in exchange for the right to build and sell additional units on the unused Floor Space Index (FSI) of the plot.

This means that homeowners get a new, larger apartment with better infrastructure, while developers profit by selling the additional homes at market rates. It’s a win-win situation that more and more societies in Mumbai are opting for.

The Role of CREDAI-MCHI in Facilitating Redevelopment

To further streamline the redevelopment process, CREDAI-MCHI an apex body of real estate developers in Maharashtra, is hosting a one-day exhibition dedicated to redevelopment on September 28. The event will bring housing society representatives face-to-face with top developers, offering a platform for discussions about the future of redevelopment projects in Mumbai.

"This exhibition is the first of its kind, allowing societies to meet with leading developers and initiate crucial dialogues about transforming their communities," said Keval Valambhia, Chief Operating Officer of CREDAI-MCHI. The event promises to accelerate the pace of redevelopment in Mumbai and offer homeowners a clearer understanding of their options.

Looking Ahead: What Homeowners Should Consider Before Redevelopment

While redevelopment offers many benefits, experts advise housing societies to be cautious before selecting a developer. It’s important to choose developers with a proven track record in redevelopment, and societies should consult legal experts to ensure that all documentation is in order.

Key considerations include the financial health of the developer, project timelines, and the viability of the proposed development. By taking these steps, societies can ensure a smooth redevelopment process that benefits both the homeowners and the developer.