At a time when the realty slump has made it difficult for the MMRDA to capitalise on its land bank,its primary revenue source,the agency has now cashed in on an alternative. This month,MMRDA has sanctioned a whopping Rs 2,500 crore worth of floor space index (FSI) to developers who had bought plots in Bandra-Kurla Complex (BKC).
A major chunk of this sum will be paid by Mukesh Ambanis Reliance Industries Ltd (RIL) alone. RIL has been sanctioned Rs 2,455 crore worth of FSI for its two plots in BKC C 64 meant for a convention centre-cum-commercial complex and C 66 for a parking lot-and-commercial tower which RIL is jointly developing with Wadhwa developers.
The rest will be paid by Naman Group,which has purchased comparatively lesser FSI from the MMRDA for additional construction at its two plots. The developers will be allowed to make a staggered payment over five years at an annual interest rate of 16 per cent. The first installment,which has to be paid by the end of this month,will fetch the MMRDA Rs 500 crore.
The rush of buyers was triggered by the MMRDAs scheme allowing developers to purchase unlimited FSI to carry out additional construction on their plots in BKC. This scheme is expected to end on March 31. It was introduced for a year in 2009 but has been extended twice and there is no word on whether it would be granted a further extension.
MMRDA commissioner Rahul Asthana said in the current scenario,it would be better for the MMRDA not to auction any plot this year. We have factored in the nine per cent interest that we would earn from keeping the proceeds of our land sale in fixed deposit. We realised that it would be better to sell land once it appreciates in the future, said Asthana. He added that developers have come forward to purchase the FSI and load it on their existing plots as it works out to be far cheaper than purchasing a new plot now.
In 2009,MMRDA increased the global FSI or the total FSI for the 178-hectare (17.80 lakh sq m) G-block of BKC to four. FSI is the permissible built-up area on a plot area. Increasing it by four times generated a FSI bank of 71.20 lakh sq m in the BKC for the MMRDA. Developers who bought plots in BKC could separately purchase the extra FSI. In the past,developers have been allowed to load as much as nine times their plot area through the global FSI scheme. However,civil aviation norms place certain restrictions on the vertical limit of these constructions due to business districts proximity to the airport.
Asthana said the MMRDA still has 18.50 lakh sq m of FSI in addition to its unsold land bank of 30 hectare in BKC. We will take a call on whether to re-introduce the global FSI scheme at a later stage, he said.