Across the Mumbai city, most builders sell up to 30% of their stock at a discounted rate to investors if they pay a major chunk of the amount upfront. These deals are struck when builders do not even have the basic construction approvals in place.
Building Rules Manipulated..!
Earlier, when building rules could be manipulated to the hilt, developers/builders/promoters misused & sold areas which were not part of the flat. These areas were then surreptitiously & illegally amalgamated into the flat to make it bigger. New rules have upset the calculations of such builders who had promised larger houses to their investors.
According to a real estate insider in Mumbai city, "The rules offer no scope for manipulation. Investors are now asking builders to return their money. There is an uneasy tension between them'' .
For instance, in the Bandra Khar area, a promoter has put up about 15 of his projects for sale after investors started chasing him to return their money. This promoter was notorious for carrying out large scale manipulations in his projects in connivance with some of BMC officials.
Till a year ago, areas like staircases, lifts, passage, ducts & AC plant rooms, were not included in the building's FSI (Floor Space Index) the ratio which determines how much can by built on a plot of land. Many unscrupulous builders/promoters illegally sold these areas and calculated their profits based on the extra areas they could exploit. The flat owner was encouraged to merge these areas into the flat.
Under the new rules, these areas are included in the FSI. However, the BMC has allowed builders to utilise 35% compensatory FSI for residential buildings (20% for commercial towers) if they pay a hefty premium to the BMC.
Mr. Pankaj Kapoor , Liases Foras, Real estate research company said , "Investors are not happy. Builders were calculating super built-up area at 100%. Now, the overall saleable area has reduced. Their entire economics has gone for a toss."
A developer's initial equity comes from bulk investors who book flats at a cheaper rate. This money is used by the developer to launch the project.
In the past, market sources blamed these investors or speculators who indulge in pre-sales for the inflated property prices in Mumbai city. They had predicted that once the new rules were implemented, such investors/speculators would get their comeuppance.
A real estate expert in Mumbai city said, ''Many investors are worried that builders/promoters will either go back on their commitments or demand more money from them. For years, investors & speculators made a killing by booking flats at an early stage and sold them when rates increased. Many builders indulge in presales the moment they buy the land and mortgage it to the bank."
A developer in centre city of Mumabai said, "Speculators/investors are the rats of the Indian real estate sector. They are the first ones to jump ship. Unfortunately, builders/promoters depend on them because they have the money.''
Bombay Municipal Corporation
Tel:+91-22-22660883, Fax:+91-22-22660906
Email:portalfeedback.it@mcgm.gov.in
www.mcgm.gov.in
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