The
sudden rise in the Transfer of Development Rights (TDR) price has taken the market unawares, despite the
fact that such a rise was likely because not much of TDR generation was
taking place. Effectively, TDR prices have now doubled, and such a
steep rise was not expected. The current price of TDR is now around Rs 4000 per sq ft, says Subhankar Mitra, Head - Strategic Consulting (West), Jones Lang LaSalle India.
A
close reading of the TDR scheme from a regulatory perspective indicates
that
the supply of TDR was expected to be driven largely by slum
rehabilitation schemes. Such projects have a long gestation period and
their success is a function of diverse factors - factors which do not
always work cohesively. In other words, a regular flow
of TDR from these projects may not be always possible.
The
current TDR rate rise is the result of a slowdown of supply from such
schemes,
and is also linked to performance of some of the leading developers
within the SRA projects sphere. Another reason for a drop in supply is
the fact that developers who earlier created projects purely to house
PAPs in the
Mahul Road area (south of Chembur) and generated TDR which
they sold in the open market have seen sale prices rise sufficiently in
this specific area to make a project with a sale component profitable.
Hence, developers have stopped
projects directed towards generation of TDR.
Since
the base FSI in the suburbs is only 1, it is a practice for developers
to load about 60% TDR in the project in order to take the FSI about
2.0. Thus, the increase in TDR cost will increase project costs. At
present, when sales are slack and the developers are finding it
difficult to sustain prices, the additional cost are going
to squeeze their margins even further.
One
way to check further TDR price hikes would be to place more emphasis on
TDR generation through SRA schemes and other infrastructure projects.
The BMC can also consider allowing more premium FSI to be used as
against TDR.
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