The Mumbai real estate sector is grappling with a significant upheaval as the rates for Transferable Development Rights (TDR) experience a sharp spike, disrupting profit margins and project timelines for developers.
Over the past six months, TDR rates in key areas like Mulund and Borivali have surged, with Mulund witnessing an increase from ₹3,500 per square foot to ₹6,000, and Borivali escalating from ₹3,000 per square foot to ₹5,700. Transferable Development Rights (TDR) are crucial rights that allow real estate firms to exceed the permissible Floor Space Index (FSI), dictating the maximum construction allowed on a plot relative to its size. Despite the recent release of 30,000 square metres of fresh TDR in the market to address the acute shortage, developers are hesitant to make purchases at double the previous rates, fearing disruptions to their profit margins. Consequently, many are adopting a wait-and-watch approach, while others are reluctantly purchasing TDR at inflated prices to fulfil customer commitments and adhere to RERA deadlines.
The current supply of TDR, however, falls short of meeting the demands of Mumbai’s bustling real estate landscape, where over 5,000 redevelopment projects are underway, quickly absorbing available TDR. In response, developers are urging government intervention to stabilise the situation and prevent further market turmoil. As a consequence of the TDR crisis, developers initiating new redevelopment ventures in Mumbai are exploring alternative strategies to circumvent the need for TDR purchases. One such approach involves constructing permanent transit camps for the government in exchange for additional FSI, thereby avoiding the direct purchase of TDR. Another option gaining traction is cluster development, wherein multiple plots are consolidated under a unified regulatory framework. In the face of escalating TDR rates and dwindling supply, Mumbai’s real estate sector finds itself at a crossroads, navigating challenges while seeking innovative solutions to sustain development momentum and meet evolving market demands.
