Developers drive Mumbai Redevelopment amid High margins & Land scarcity

Due to the scarcity of greenfield land in the nation's capital, developers from all over the nation were drawn to Mumbai's redevelopment potential.

The fad of 2024 was turning old buildings into contemporary condominiums with every amenity a buyer could want. Newer redevelopment projects were added to the portfolios of several listed real estate developers. The segment was so popular that developers chose to capitalize on the trend, going so far as Bengaluru and, more recently, Delhi-NCR.

Developers from all over the nation were drawn to the financial capital by the high margins and scarcity of greenfield land, which attracted them to renovate dilapidated structures and impoverished areas.

In Maharashtra, several historic structures, including those in Mumbai, Pune, and Nagpur, are undergoing renovation. Due to a lack of available land, Mumbai's market primarily relies on redevelopment for new housing supply. Approximately 10,000 historic buildings need to be renovated in Mumbai alone.

Old society buildings may be redeveloped under the Maharashtra Apartment Ownership Act (MAOA), so long as the project has the approval of at least 51% of the members. Real estate developers and unit owners in these historic buildings typically sign a development agreement under the redevelopment model.

Following redevelopment, the developer promises each apartment owner additional space. In return, the developer is allowed to construct more homes that will fetch a higher price on the open market by using the plot's leftover unused Floor Space Index (FSI).

In addition, the government of Maharashtra has a policy for self-redevelopment, which allows society's members to redevelop the society by designating the necessary personnel and expertise.