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dharavi: Realty developers to approach Maharashtra govt to reconsider Dharavi TDR usage move

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Real estate developers are planning to approach the Maharashtra government seeking a review of its notification making usage of 40% transferable development rights (TDRs) from the Dharavi redevelopment project mandatory for their projects in the country’s commercial capital, said persons with direct knowledge of the development.

The directive, according to property developers operating in the city, to source 40% of TDRs from one specific special purpose vehicle is certainly not a fair market practice and therefore needs a renewed assessment.

Maharashtra government, through a notification, has made usage of 40% of TDRs to be generated from the Dharavi redevelopment project mandatory for realty developers for their projects in the city.

“We are seeking an appointment with the chief minister and officials of the Urban Development Department as early as possible to apprise them of the impact of this move. It is certainly not a fair market practice,” said one of the leading developers.

While an Adani Group entity holds 80% stake in the Dharavi Redevelopment Project Pvt Ltd (DRPPL), which will be redeveloping Asia’s largest slum spread over prime 600 acres in the heart of Mumbai, the state government holds the balance 20% stake.

Realty developers to approach Maharashtra govt to reconsider Dharavi TDR usage move

“Allowing the TDR seller to sell at 90% of ready reckoner value is simply going to escalate the real estate prices, which will pressurize the home buying market as housing prices will increase further,” said another Mumbai-based developer.

The TDR mechanism allows transfer of unused development rights from one zone to another and these rights can be bought by developers at a certain price to increase their permissible development in a project depending on the location. In the prevailing market conditions, the TDR rates hover around 30-40% of the ready reckoner value of the receiving zone.

According to developers, they are already paying 50% more premiums and charges related to project development than the National Capital Region market and 27% more than Chennai and other key markets. Any move related to sourcing of TDRs will take away startups and other important sectors from the city.

The redevelopment of Dharavi is expected to generate a lot of TDRs owing to the slum rehabilitation work. Adani Properties had bid Rs 5,069 crore for the project as against the government’s stipulated minimum investment of Rs 1,600 crore that the lead partner of the special purpose vehicle was expected to bring in.

The state government had floated fresh global tenders for the much-delayed project in October 2022. While the pre-bid meeting was attended by a total of eight entities including international players, only three entities had bid for the project.

The government has already announced a floor space index (FSI) of four for the redevelopment work here along with several concessions in the form of a premium paid by the developer, inspection charges, Goods and Service Tax (GST) etc.

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