13 December,2010 06:38 AM IST | | Varun Singh
Government's resolve to give more floor space index for construction in the suburbs will bring property prices down
The Maharashtra Assembly's decision to let the BMC grant an extra floor space index of 0.33 in the suburbs has made builders happy, and after a very long time, the buyers as well.
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As builders get extra space to construct houses, they would be able to reduce the prices in the real estate sector.
While the FSI premium rates are not yet out, it is expected to be upwards of Rs 1,600. Currently, buying TDR is costlier than buying FSI.
Moreover, as builders expect even the TDR rates to come down to Rs 1,750-2,000 per sq ft from Rs 1,700 to Rs 2,600 per sq ft, prices are bound to be affected in the favour of buyers.
Mihir Dhruva, CMD, Habitat group, a real estate development firm, said, "Builders in the suburbs will benefit because the extra FSI will help them develop on more space.
As the supply increases, the prices would come down. I can estimate a five to10 per cent correction in the prices."
According to sources in the real estate market, the Andheri-Bandra stretch will gain extra space of 2,00,000 sq ft, plunging the prices down.
"We are expecting a correction of 15 to 20 per cent in the prices. While the correction would be more between Santacruz and Andheri, the Bandra-Khar belt would not be affected as much," said a realtor from Khar.
Builders say this will help them in projects they were earlier shying away from because of less profit margins.
Rajesh Vardhan of Vardhman group said, "The projects that had become unviable would become more viable as buying FSI is cheaper than TDR in the suburbs.
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This will help in increasing the stock of available space, making the prices reasonable. It is expected to bring the rates down by 5 per cent."
What is TDR?
Transfer of developmental rights (TDR) is given to a builder from the government as remuneration for the developmental works they do for the public.
TDR can be used only in the north of the city.
The TDR a builder gets can u00a0be sold to another builder at a price that prevails in the u00a0market.
2,00,00 sq ft
The extra floor index space that the Andheri-Bandra stretch will benefit
What is FSI
Floor space index (FSI) allows the builder to go vertical while constructing a building. An FSI of 2 allows a builder to construct a building with a total area that would be two times the actual u00a0area of the plot on which the building is constructed.
