Is Mumbai’s housing society redevelopment just a numbers game, and what’s a fair extra area for homeowners?

Mumbai redevelopment: Developers call it a numbers game, warn of irrational deals over ₹1 lakh per sq ft, urge homeowners to be cautious.

A co-operative housing society in Dahisar, Mumbai, embarked on redevelopment in 2013 after selecting a developer who promised homeowners 40% additional space over their existing flats. The developer assured delivery within three years and agreed to pay rent for temporary accommodation during construction.

Mumbai real estate update: Experts have warned that many redevelopment deals involving housing societies are irrational, and urge homeowners to be cautious. (Picture for representational purposes only) (Mehul R Thakkar/HT )

However, just a year into the project, the developer stopped paying rent, leaving residents to bear the cost themselves and unsure about the project’s future. “The developer gave us no proper information for the next two years, and we were left to pay rent on our own, even though our building had already been demolished,” a society member told HT.com on condition of anonymity.

By 2016, the developer cited financial troubles and sought to renegotiate the agreement, reducing the promised 40% extra space to 20%. The members reluctantly signed a supplementary development agreement, but progress stalled again after Demonetisation.

In 2018, the developer admitted he could not complete the project and promised to help find a replacement. After years of uncertainty, the society finally brought in another developer in 2023, and work resumed in 2024, but with a much-reduced offer of just 10% additional space.

“We have suffered huge losses, not only the 30% extra area that was denied to us, but also ten years of paying rent on our own, along with many other hardships that cannot even be quantified,” the society member said.

What should housing societies keep in mind before negotiating a redevelopment deal?

According to real estate consultants and developers, society members should be offered only moderate increases in their flat area to ensure the long-term viability of redevelopment projects.

"Some societies in Mumbai, such as in Juhu or Bandra, have been offered additional area, ranging from flats 50% to up to 155% larger. The recent trends of more than 50 per cent share work in markets like South Mumbai, where prices trade at above ₹1 lakh per square foot. Developers have offered above 100% up to 155%," said Gulam Zia, Senior Executive Director - Research, Advisory, Infrastructure and Valuation at Knight Frank India.

Zia said there may be scope for renegotiations in some cases, but deals have become irrational in others. Developers might push prices beyond ₹1 lakh per sq ft, but there’s always a risk, and homeowners need to be cautious.

According to a report titled Upgrading Mumbai- The redevelopment story released by Knight Frank India, a real estate consultancy, locations where sale prices are below ₹40,000 per sq ft, developers ideally cannot share more than 30–35% of the total area with the society.

"This ratio moves up to 35–40% in markets priced between ₹40,000 and ₹60,000 per sq ft. However, even in locations as premium as ₹75,000 per sq ft, the share to society members cannot practically exceed 50% of the total built-up area," the report said.

Developers say redevelopment has turned into a numbers game

According to developers, redevelopment deals have become irrational, especially in areas like Andheri, Bandra, and Khar.

A Bandra-based developer, who wished to remain anonymous, said, “I recently walked away from a deal after offering 75% additional area to a housing society seeking redevelopment. That was the maximum I could offer, but the society is now negotiating with two other developers promising nearly 100% extra area. I’m very clear that I don’t want to overtrade right now.”

'Redevelopment is not just about additional area'

According to Sharan Babani, promoter of Satguru Builders, a boutique developer having projects in Mumbai's Bandra and Khar, most redevelopment society committees tend to focus on one thing: getting the 'best deal.'

This usually means negotiating for the highest rent during construction, the biggest corpus, and the most additional area per flat. But that much-talked-about 10% extra area often translates to just 50–60 sq ft in reality, a small study, or perhaps a slightly larger balcony. It’s a marginal upgrade at best, not a transformational one.

"Choosing a developer based on slightly better figures instead of capability and track record is like choosing a surgeon based on price. It might seem like a win today, but it can turn into a lifetime regret. Yet, in pursuit of these small gains, societies often end up compromising on far more important aspects," Babani said.

"Efficient, well-planned layouts are overlooked. Construction quality and workmanship get diluted. Long-term durability takes a back seat. Aesthetic value is ignored. And timeliness, along with professional execution, is frequently sacrificed," he said.

Mumbai's redevelopment market in 2030

According to the Knight Frank India report, as many as 44,277 apartments worth ₹1.30 lakh crore are expected to enter Mumbai’s real estate market through the redevelopment segment by 2030. The free-sale component from society redevelopments is projected to generate around ₹7,830 crore in stamp duty and ₹6,525 crore in Goods and Services Tax (GST).

The report said that Borivali, Andheri, and Bandra micro-markets emerge as the top three redevelopment hotspots, together contributing over 139 acres of activity. By contrast, Central and South Mumbai recorded just 43 redevelopment agreements, underscoring the challenges of fragmented ownership, legacy tenancies, and higher entry costs.

According to the report, a total of 910 housing societies have signed development agreements (DA) since 2020, unlocking nearly 326.8 acres (1.32 mn sq m) of potential land area in the Mumbai limits, based on Floor Space Index (FSI) utilisation norms and average unit sizes across the regions.

The report notes that, according to 2017 estimates of the Mumbai Civic Body, also known as Brihanmumbai Municipal Corporation (BMC), an estimated 160,000 societies were over the age of 30 and eligible for redevelopment.