BT : Mumbai slums giving way to high-rise luxury condos for super-rich

Business Times - 14 Aug 2010

REAL ESTATE
Mumbai slums giving way to high-rise luxury condos for super-rich

(Mumbai)

DEVELOPERS in Mumbai, the world's most densely populated city, are putting up luxury high-rise condos for millionaires in former slums and re-housing displaced residents on the same properties.

The 60-storey twin-tower Imperial, with apartments costing as much as US$14 million, was built on the narrow lanes cluttered with tin sheds that once housed 10,000 slum residents. The 50-storey Lodha Bellisimo has sprung up a few metres from the prison that houses the only gunman caught alive during the 60-hour terror siege of the Taj Mahal Palace and Tower in 2008.

'Mumbai is a very congested city and to accommodate this congestion and have more open spaces we have to rise up vertically,' said Amit Thacker, a director at SD Corp, builder of The Imperial, India's tallest apartment complex. 'This is possible only when we clear the existing occupied plots of land by rehabilitating the existing residents.'

Constrained by a four-decade-old law limiting height in built-up areas of India's financial capital, developers are constructing luxury towers in shanty towns and re-housing the slum-dwellers in new flats the size of a single-car garage. India's government is relying on such projects to make cities slum-free by 2015 as it braces itself for an inflow of about 250 million people who are expected to pour into urban spaces in the next 20 years.

The penthouses at The Imperial are estimated to sell for between US$13 million and US$14 million, according to Jones Lang LaSalle Meghraj, the local unit of the second-largest publicly traded commercial property broker. They boast views of the Arabian Sea, a golf course and Mumbai's horse-racing track. Flats at the Bellisimo cost as much as US$6 million.

DB Realty Ltd and the K. Raheja Corp are building luxury residential towers with views of train tracks on defunct textile mills in central Mumbai's Jacob Circle, an area congested with traffic, industrial units and slums.

FSI Developers including Housing Development & Infrastructure Ltd and Ackruti City Ltd are building in slums because of a 46-year-old law that limits building height in established residential areas of Mumbai, a city of 18 million built on seven islands.

Mumbai's Floor Space Index (FSI) - which determines the maximum floor area permitted in a building compared with the land on which it's constructed - was introduced in 1964 and set at 4.5. That means a building on a one acre plot of land, a little smaller than a football field, vertical living space totalling 196,000 square feet can be built.

The Municipal Corporation of Greater Mumbai lowered the permitted FSI to 1.33 times in 1991, which means all buildings with an FSI exceeding 4.5 times were built before 1964. That's the opposite to most cities with limited land which tend to raise the permitted FSI to accommodate growth, as in Manhattan, Singapore, Hong Kong and Chinese cities, according to a World Bank report last year.

'Abnormal constraints on FSI are one of the main reasons' Mumbai hasn't built more tall buildings, said New Jersey-based Alain Bertaud, an urban planning consultant for the World Bank who has been visiting the city annually for the past 15 years.

While Mumbai's FSI varies from one to 1.33, it can go as high as four in the slum areas under redevelopment.

Half of Mumbai's 18 million residents live in slums - more than the population of Switzerland. The city's clusters of ramshackle huts made from scrap materials line narrow garbage-strewn alleyways, usually lack proper sanitation facilities and water supply, and residents often use pilfered electricity from tapping into power cables.

The business district is a different world. Mumbai is the world's fourth-most expensive business location, behind London, Hong Kong and Tokyo, according to real estate services company CB Richard Ellis Group Inc.

The government plans to make the country 'slum-free' by 2015, Finance Minister Pranab Mukherjee reiterated in his budget speech in February. -- Bloomberg

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