The city’s redevelopment initiatives are on the verge of being abandoned as a result of the April 15 projected doubling of jantri (property valuation) rates.
By April 15, many redevelopment initiatives won’t be able to pass their plans. Developers are responsible for paying for FSI at the previous jantri rates if plans are authorised prior to April 15. Following then, the price of the FSI you buy will double. Due to this problem, one developer cancelled two redevelopment deals last week, and another developer cancelled three.
At least 50 redevelopment projects, according to CREDAI Ahmedabad, will be equally impacted. The cost of redevelopment agreements, which get 5% of the jantri rate, will increase in proportion to the doubling of jantri rates.
“FSI purchase will cost double so project costs will change totally. I had finalized two redevelopment projects in Navrangpura but have decided not to go ahead. The higher cost of FSI will mean these projects will not be competitive. For one project, in the old scenario, I was to pay Rs 5.50 crore for an extra 2.2 of FSI. Now, it will cost Rs 11 crore,” said Jigar Bharwad, Director of PF Yashasvi Group. “All redevelopment projects will be put on hold due to this. If the deals do go ahead, rates will be increased by at least Rs 800-1,500 per square foot for the finished product in residential and commercial projects. This will not be competitive against ongoing projects. If the cost of purchased FSI remains the same after April 15, we can do redevelopment projects.”
Similarly, Venus Group has communicated with the societies it is planning to redevelop. “Redevelopment is a long process and it is not possible to get plans passed before April 15. We had decided to redevelop three societies in Ambawadi. Now we have told the members that we will have to reduce the new carpet area or will need two floors of commercial space in the project instead of just the ground floor to make the project viable. Currently, all three projects are on hold,” said Rajesh Vaswani, MD of Venus Group.
Three redevelopment projects were cancelled by a major real estate company a while back.
“Developers purchase FSI and pay a premium for it, which ultimately affects the end consumers. By our estimates, at least 50 society redevelopment projects may not remain viable. We want purchased FSI and non-agriculture (NA) land premiums to be delinked from the jantri, and fixed amounts should be charged. RERA approved projects should also be exempted from the new jantri rates to help middle class buyers,” said Tejas Joshi, President of CREDAI Ahmedabad.