Self –Redevelopment – The Future Of Mumbai Real Estate By Ramesh Sanghvi, Sanghvi Parrsssva Group Of Companies. Mumbai is the perfect example for the redevelopment as compared to any metropolitan city in India. Redevelopment is a fact of life in any ageing, land-starved metropolitan city. The conventional way of redevelopment in India involves appointing developers to redevelop old and dilapidated housing projects. Several housing societies in Mumbai are now looking for self-redevelopment. Some homeowner groups are now taking the route of appointing their own architects, contractors and project management consultants to execute the redevelopment of their projects. These can be single stand-alone buildings or housing societies of more than one building. For funding self-redevelopment, the owner collective will invariably opt for bank loans.
Benefits of Self-Redevelopment
In self-redevelopment, the housing society members themselves reap the full benefits of the unused potential of the property, without stake dilution. Because of the elimination of stake dilution, the homes they get via self-redevelopment are also invariably much bigger than what they could hope for if a builder does it. The homeowners have complete control over the quality of construction, the completion timeline, and enjoy more corpus funds because they retain the right to sell surplus homes generated in the redevelopment process. There is a lot of scope for such extra homes to be generated, thanks to Government intervention.
With MHADA and the Maharashtra government promoting this concept, various banks and financial institutions are seeing the viability of lending to societies targeting self-redevelopment. Banks like Mumbai Central District Co-operative Bank has provided loans to nearly 30 societies so far, while MHADA – appointed as the supervising authority give single-window approval for self-redevelopment. Other banks like Thane District Cooperative Bank and Pune District Cooperative Bank have also thought of offering loans for self-redevelopment. The reason why homeowner bodies turned to developers in the first place is that there were many positive antecedents where everyone got what they had signed up for. If done at the right time and by the right builders, redevelopment can certainly be a win-win situation for all concerned. There are indubitable benefits to engaging the right builder for redevelopment.
A Highly Complex Undertaking
Despite the many benefits of self-redevelopment, it goes without saying that it presents a huge challenge to people who have no expertise in any area of development. From applying for funds to finding the right contractors, and from monitoring the entire process to the fair division of the resulting properties, self-redevelopment is a huge uphill task – especially for people who lack the core expertise and have other jobs and businesses to maintain.
There are also other potential complications on the route to self-redevelopment. As on date, there is no policy governing self-redevelopment projects; it remains the initiative of the respective society. Seeing its potential and probable benefits, the State Government is now mulling the creation of a state policy on self-redevelopment. However, no clear and actionable policy decision has emerged from this as yet.
The banks offering loans for self-redevelopment make it mandatory to get 100% written consent from all involved stakeholders for the project to commence.
Guidelines for Societies Considering Self-Redevelopment
Depending on the right government policies and sufficient success antecedents, the trend of self-redevelopment can become a bigger market force and involve bigger housing projects in the future. Success antecedents are very important, so it is imperative that societies do their due diligence before appointing the necessary entities for the redevelopment of their projects.
As already stated, getting consensus for every detail from all members of the society is very important, and the likelihood decreases as the size of the project increases. Success on this front depends on excellent communication between all society members and should, if possible, involve a steady stream of professionally crafted communications as well as expert in-person presentations to outline all the benefits. The best platform is a series of focused society meetings wherein all critical points can be explained in detail, and all doubts put to rest.
A sufficient number of stakeholders must be proactively being involved in several activities until the completion of the project. From getting the requisite approvals from concerned authorities to getting all paperwork done to getting no-objection certificates, society members have to do it themselves. In other words, successful self-redevelopment calls for an exceptionally high level of co-operation and dedication among all stakeholders.
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