Revised SRA permissions for coastal regulation zone may hit complete and ongoing seafront redevelopment projects, reduce saleable area, erode profits: Builders

Mumbai: Several builders redeveloping seafront properties said they had either completed their projects or were halfway through construction when they received revised permissions from the Slum Rehabilitation Authority (SRA), reducing their saleable areas, which could badly hit their profits. Some industry observers claimed these builders collectively could lose several thousand crores.

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TOI report on Friday prompted strong reactions in the real estate sector. Developers said revised letters of intent (LOIs) issued by the SRA have reduced sanctioned built-up areas by hundreds of square metres in some cases, impacting financial feasibility in prime coastal micro-markets where sale prices can exceed Rs 1 lakh per sq ft.

Under the Coastal Regulation Zone (CRZ) norms notified in 2019, FSI is to be calculated on the net plot area, while several SRA permissions were issued using the gross plot area, enabling higher buildable potential. Developers involved in such projects said they had paid substantial premiums to the SRA to secure additional construction rights under Development Control Regulation (DCR) 33(11), a provision that allows extra FSI in return for builders providing free rehabilitation tenements to SRA.

A senior developer raised concerns about projects that have already received occupation certificates or where homes have been sold based on earlier approvals. The developer said changes at this stage could trigger disputes unless compensatory mechanisms are offered, and questioned how SRA would treat buildings already constructed under previously granted permissions.

As reported by TOI, more than 45 redevelopment projects, mainly in the H-West and K-West wards, are affected after the SRA issued revised LOIs. Locations cited include Juhu and Mount Mary, Bandstand, and Pali Mala Road off Carter Road in Bandra. SRA sources, however, said only about half a dozen projects have been impacted.

Meanwhile, housing experts described the DCR 33 (11) scheme under SRA as “highly shady’’. Housing activist Chandrashekhar Prabhu said, “These violations are due to abuse of 33(11). The main point is that under the amended 33(11) you need not be a slum to avail of the bumper FSI. You can be a perfectly legal cooperative housing society or a tenanted building. You only have to promise the SRA that you will give them some tenements against the increased FSI. These tenements need not be on the same land on which bumper FSI is used. It can be anywhere else. So substandard quality tenements are given in non-prime areas to SRA in return for multifold FSI increase in prime areas.’’

Municipal commissioner Ashwini Bhide has also strongly objected to the SRA liberally granting concessions to builders under DCR 33 (11). She recently wrote to the state urban development department stating that the BMC was losing potential premium revenue because premiums charged by the SRA are lower than those levied by the civic body. The BMC has also contended that the SRA has been more accommodating in granting permissions, encouraging developers to route proposals through the SRA rather than the municipal corporation.

In her letter, Bhide alleged that the SRA granted concessions to builders without enabling provisions under DCR 33(11). The letter stated that the SRA was issuing permissions on non-slum plots under Regulation 33(11) and that developers were being drawn to the SRA due to lenient scrutiny, relaxations in planning and reservations, and differences in premiums. The letter added that this was resulting in new buildings on non-slum plots being developed with sub-standard town planning norms, alongside revenue losses for the BMC and the state govt.

The letter also said that increasing numbers of proposals were being submitted to the SRA on “zero slum plots” instead of the BMC in affluent localities including Bandra, Juhu, Worli, and Malabar Hill.

The BMC depends heavily on premium collections from real estate development to fund major infrastructure projects across the city. As developers seek faster or cheaper clearances through alternative approval routes like the SRA, the civic body has raised concerns about a potential erosion of its revenue base.

For developers, the revised LOIs have introduced uncertainty around project viability where financial models were built on earlier FSI assumptions, particularly in projects where construction has progressed and sales projections were tied to the previously sanctioned buildable area. Industry sources said the revised permissions could lead to litigation and delays if disputes arise over the applicability of revised calculations to projects that were already approved or partly executed.