Saturday, May 7, 2011

Maharastra FSI Hike Soon.

The Maharashtra government is likely to raise the floor space index (FSI) for suburban houses perhaps by 0.33, reports CNBC-TV18’s Priyanka Ghosh.

The current suburban FSI is that 1 and on top of which 1 of TDR can be loaded. Now the government is
saying that of the one TDR that can be loaded on top of one FSI by 33% from us and by 66% or thereabouts from the supply side companies. Obviously this means that this will hit the volume of TDR that a supplier can actually sell which namely is going to impact HDIL because it controls about 90% of the market on the supply side.

The price at which they can sell TDR will also have to be reviewed because now there will be another supplier in the market which is the government itself. The government has said that it is going to utilize the fund in building infrastructure for the city.

Now when the government had first come out with this rule in 2008, there was subsequent public interest litigation (PIL) in the High Court. The High Court stayed the order last year. This might actually get into a cyclical kind of litigation. Also, the supply side companies have been very strong lobby and they have tried to hinder this legislation from coming into being for a very long time.

The general consensus in the market right now is that this will actually go through. The government will perhaps effect this legislation at this point in time but will it actually be implemented or will it again get into some kind of litigation one does not know.

The companies that will be impacted on the supply side: there will be HDIL quite significantly, DB Realty, Ackruti City.

On the buy side, Oberoi Realty, Orbit Corporation though not too much in the suburbs, Indiabulls, these might actually be the beneficiaries of this move.


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