Great cities thrive when public policy, market forces and urban planning are aligned. No Indian city captures the challenges – and opportunities – better than the Mumbai metropolitan region, the largest urban centre in the western state of Maharashtra.
With a population of more than 20m, Mumbai – particularly its southern tip – is often compared to Manhattan: both are global financial centres built on narrow strips of land, relatively cut off from their rural hinterlands and with high population densities. But there the comparison ends.
Until recently, public policy and market forces were perceived as intertwined in Mumbai, restricting its growth. An ambiguous set of development control regulations allowed policy makers to grant additional square footage, or a higher floor-area ratio (FAR), for architectural elements such as balconies and flower beds.
Developers misused this provision to construct as much as 10 times more than their allotted square footage in some cases, according to Abhisheck Lodha, managing director of real estate developer Lodha group. “Everybody’s interests were being broadly served and hence nobody was interested in breaking it,” he says.
New policies proposed by Prithviraj Chavan, Maharashtra’s chief minister, are among the first steps to improve the rule of law in real estate development. Chavan was brought in from Delhi by the ruling Congress party to run the state in November 2010, after a property scandal that involved a high-rise apartment block intended for army veterans and widows, being built by circumventing rules and sold to senior government officials. The scandal triggered the resignation of Chavan’s predecessor.
In January last year, Chavan announced a new set of development regulations for Mumbai that covered extra architectural elements such as balconies in FAR calculations. To compensate for loss in square footage, developers are allowed to purchase additional square footage – up to 35 per cent for residential developments – by paying a premium.
“The [old] rules were so complicated that they encouraged a lot of rent-seeking” says Chavan. “I felt that discretion had to be cut down, government revenues had to increase, and the system had to become more transparent. Clearances at the local level are much faster now.”
Some developers, including Lodha, applaud Chavan’s attempt at tackling one of the root causes of corruption. “The chief minister has been very upright, very honest and, more importantly, has a sense of urban planning,” he says. “A decision was made that definitely hurt all developers – including us in the short term – but in the long term has made this city’s planning permission process less opaque and hopefully at some point or the other will make it faster.”
Several Lodha projects are under way, including the World Towers in Mumbai’s upscale Worli district. It is billed as the world’s tallest residential tower and has been designed by global architects Pei Cobb Freed & Partners. Units range from three and four-bedroom apartments to penthouses, and duplex penthouses, and prices range from Rs125m ($2.3m) to Rs1bn ($18.4m), depending on format.
Others such as Ashutosh Limaye, head of research at global realtor Jones Lang LaSalle’s India office, are more guarded, noting that the change in regulations has had unanticipated negative consequences, making buildings more formulaic.
“I love features such as flower beds, architectural projections, voids, ducts, a play of solid versus voids,” he says. “Because the provisions were grossly misused, the government came down heavily on them and stopped them. But what it has done is made the elevations very dull now. The projects that got approved under the newer norms are like matchboxes.”
But much more needs to be done before Mumbai can claim to offer a world-class quality of life for ordinary citizens. Lodha points out that developers still struggle to get supply to market, and that there is a supply-demand imbalance in real estate. Limaye, meanwhile, says transport infrastructure needs urgent attention.
More measured growth can be seen in the Gujarati city of Ahmedabad. Over the past decade, the Gujarat state government and the city government have sought to encourage sustainable expansion. To this end, they have adopted legal urban planning mechanisms and policies to boost public transport. As a result, its growth has been far better planned and structured than most other Indian cities.
Shaan Zaveri, managing partner of Amaya Properties, an Ahmedabad-based high-end residential developer, says the city now attracts real estate investment from all over the world – including expat Indians. “Ten years ago we had nothing going for us, after the riots, the earthquake and the textile mill shutdown,” he says. “Now, it’s great to be envied.”
Amaya Properties has several formats under construction, including three-bedroom apartments outside the city, weekend villa homes and penthouses within city limits, ranging from Rs10m ($182,500) to Rs50m ($912,000) each. “Without the town planning scheme, [regulating growth at the city’s periphery] there would have been further demand-supply imbalance in real estate,” he says. “The new bus network has also made public transport a respectable way to travel. It has helped improve access to areas such as the old city, which were previously inaccessible.”
Partha Mukhopadhyay, an urbanisation expert at Delhi-based think-tank the Centre for Policy Research, compares the intellectual discourse on cities between India and China. “We need to think through our problems and find our own solutions,” he says. “There are a lot of people in India trying to change cities but very few who are trying to understand them, unlike China where they change cities to fit their understanding.”