There is an uneasy silence among Mumbai builders. The sharks are up against a giant whale. The whale is the Adani Group. Ever since the giant conglomerate won the bid for the redevelopment of India’s largest slum Dharavi – it had become clear that the company would soon become a key player in the Mumbai real estate market. That did not cause much heartburn as everyone recognized the complex and mammoth task to redevelop a 600-acre slum was the work of only a select few.
With a peculiar notification last month by the Maharashtra Government, the heartburn began. The Government announced that the first 40 percent Transfer of Development Rights (TDR) was to be mandatorily purchased from the Dharavi Redevelopment Project (DRP). What is TDR? Simply put - it is a currency that allows you to construct more area in a plot of land.
How does one generate TDR? Suppose a developer is entitled to build 1,000 square feet based on plain-vanilla metrics like plot size and road width, but he can build only 600 square feet due to exotic barriers like coastal regulation norms or proximity to naval defense areas. Then the remaining 400 square feet can be sold as TDR in the open market for a price. Given the location of Dharavi,it seems plausible that Adani may become a major supplier of TDR in the Mumbai real estate market. Proximity to the airport will render restrictions in constructing tall buildings – allowing a strong generation of TDR from Adani.
