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After keeping it on hold for two years, the redevelopment of cessed buildings in South Mumbai with new FSI of 3 under amended DCR 33 (7) has been recently proposed by the State Government in South Mumbai for the buildings under B and C category constructed prior to September 30, 1969.

A question arises here that while the decision would free the vertical growth in a city that’s clamouring for space, would it not put an enormous strain on Mumbai’s already high-pitched infrastructural factors like water, transportation and electricity etc?

However, it has to be guessed whether the extra supply of housing in the coming days would have any significant impact on property prices in areas under redevelopment. Even though property markets in several cities have gone down, the degree of correction has been rather not that significantly felt till the date in Mumbai.

The buildings, pre-1969 under tenanted properties in the island city of Mumbai were classified into three categories: A (pre-1940), B (1940-1950) and C (1950-1969).

It is also required of the Government to encourage cluster redevelopment in the city as individual development of buildings does not create social infrastructure like proper parking, gardens and open spaces and other facilities for citizens.

Irrespective of its category, the redevelopment of 15,000 odd cessed buildings will now be a viable proposition for Developers. FSI is the amount of construction that can be made in relation to the size of the plot. Buildings constructed before 1969 which pay cess to the Government are called cessed buildings.

Over 12,768 structures were built before 1940 were classified under A category and until now, the State granted FSI of 3 to these buildings while those buildings constructed between 1940-50 (B category) and 1950-1969 (C category) were given FSI of 2.5.

The FSI of 3 has now been extended to all buildings constructed before 1969 (both B and C category included). In other words, clubbing the buildings that were earlier classified as category A, B and C, are now entitled to FSI of 3 for redevelopment.

Category B constitutes 1,169 buildings built from 1940 to 1950. In category C, from 1959 to 1969, 1,058 cessed structures cropped up.

In addition to the extended FSI of 3 and according to the DCR Amendments with effect from 06/01/2012, the tenants of cessed buildings shall also be entitled to Fungible FSI. Balconies, Flower Beds, Terraces, Voids and Niches are now counted in the FSI. To compensate for the loss of free-of-FSI areas, Fungible FSI to the extent of 35% for Residential Development and 20% for Industrial and Commercial Developments has been allowed with premium.

Fungible FSI would be available at 60 per cent premium for Residential, 80 per cent for Industrial and 100 per cent for Commercial at the Ready Recknor Rates (RR Rates) which are revised from this January 1st, 2012 ranging between 5 per cent and 30 per cent in 716 Zones of Mumbai. The exclusive benefit of Fungible FSI is that it can be used for making Balconies, Flower Beds, Terraces, Voids and Niches with an option that it can be used for constructing bigger habitable areas.

For several years, Developers were reluctant to undertake redevelopment of these buildings as the plots on which they were constructed are small and it was difficult to redevelop them. As a result, residents continued to suffer in old structures with the constant fear of the buildings collapsing.

The Government Resolution on the FSI hike to 3 will be passed in two weeks from now. The proposal to increase FSI for all the cessed structures irrespective of its category was pending with the State since September 2009.

Though the extra FSI will hardly affect densely populated chawls which have smaller plots with bigger population ratio, the main beneficiary of the escalation in the FSI will be tenants of Dadar, Parel, Worli, Matunga, and Sion. These areas have more than 4,000 cessed buildings. A majority of cessed buildings are in island city and a few in suburbs. Grant Road houses 3,354 cessed structures, the largest chunk in the city, followed by Tardeo and Byculla with 3,067 and 2,264 respectively.

Cessed buildings in areas such as Bhendi Bazar, Sandhurst Road, Byculla and Grant Road will fall under the cluster redevelopment bracket and will enable the Developers an FSI higher than 3. Redevelopment in Worli, Dadar, Parel, Matunga and Sion had so far offered lesser incentive. These being prime locations will certainly attract Developers.

A majority of buildings collapse as the dilapidated structures under cessed buildings are precarious and unsafe for living. Despite the fact, the tenants demand a larger habitable carpet area. This was unviable for the Developers and left a meagre incentive for them. Hence many old structures had been pending for redevelopment.

Due to increase in FSI up to 3, the redevelopment spree is expected to transform the face of the realty sector.