City turns a giant construction site, is adding 5 Nariman Points, ET RealEstate

October 25, 2023

MUMBAI: The city has turned into a giant, suffocating construction site. The area of ongoing real estate construction activity in Mumbai is about 3.24 cr sq ft, equivalent to roughly five times the built-up area of Nariman Point (70-80 lakh sq ft), shows data collated by the research firm Liases Foras.

The construction frenzy—one of the factors responsible for appalling air pollution—is the result of a major sop given by the state government to builders during the Covid lockdown in 2021: slashing premiums by half. In turn, the BMC earned a record Rs 15,000 crore from developers that year.

By the time the sop ended in January 2022, the BMC had approved new real estate projects with a built-up area totaling about 15cr sq ft in Mumbai. This area, according to a ballpark estimate, is roughly the size of 15 Nariman Points.

At the height of the pandemic, the state halved the hefty premiums that developers pay to the BMC. The discount, which lasted for a year, was offered to the construction industry which had suffered a major jolt due to Covid. Developers saw a golden opportunity there and rushed to get their project files cleared by paying only half the premium amount.

“The annual incremental construction in the BMC limit of Mumbai has grown 68% since 2022 and 142% from 2021. The Mumbai Metropolitan Region (MMR) also shows a 36% growth since FY 22 and 98% growth since FY 21,” the Liases Foras report said.

The effect of these constructions can be seen in the form of an enormous poisonous haze hanging over the city. In the western suburbs, especially Bandra, Khar and Santacruz, cement and debris trucks constantly move in and out of the narrow lanes as dozens of plots are being redeveloped.

Covid sops to builders earned India’s richest civic body 15,000 crore in project premiums

Mumbai is finding it difficult to breathe since it has transformed into an expansive real estate development zone. Since the state’s 2021 Covid sop, in the Bandra-Andheri belt, 780 projects were approved. In the eastern suburbs, from Mulund to Ghatkopar and from Chembur to Kurla, 834 approvals were given. Among the BMC’s wards, T ward (Mulund-West) will contribute the maximum supply of built-up area: 1.5 cr sq ft. The wards containing Borivli, Bhandup, Andheri and Parel-Dadar will each see over 1 crore sq ft of supply.

In 2021 alone, 2,473 building project files were approved by the BMC, earning India’s largest and richest civic administration a record Rs 15,000 crore as premium fees from developers.The frenzied construction activity, primarily focused on redeveloping old buildings and housing societies, where low-rise structures are being replaced by towering skyscrapers, stands as a significant contributing factor to the worsening air quality in Mumbai.

“The growth in supply and construction is driven by the discounts in premiums offered by the state government to developers, increase in FSI, and growth in the housing market of the Mumbai Metropolitan Region,” said Pankaj Kapoor, founder-MD of Liases Foras. He said the figures only mention the free sale component of redevelopment projects. If the supply of the rehab portion were to be added, the actual construction quantum would be much more. “The supply-side incentives have boosted the housing production and economy of the state, albeit it has also increased pollution,” he said.

  • Published On Oct 25, 2023 at 09:03 AM IST

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