The Maharashtra government proposes to redevelop 202 chawls of the erstwhile Bombay Development Directorate, situated on 91 acres in south-central Mumbai.
This would translate into construction of 15 million sq ft of floor space index or about 20 mn sq ft of saleable area.
Considering a construction cost of Rs 2,500 a sq ft and the prevailing sale rate of Rs 30,000-40,000 a sq ft, the project entails a total sale value of Rs 15,000 crore (Rs 150 billion).
This project is being proposed after the government recently launched redevelopment of Sector-5 of the Dharavi slums, expected to have a turnover of Rs 5,000 crore (Rs 50 billion).
More, the government's move coincides with the much-debated redevelopment of 249 four-to-six storied buildings at Bhendi Bazar in south Mumbai.
This is a Rs 2,900-crore project (Rs 29-billion).
The BDD chawl redevelopment is also being proposed at a time when nearly 4,500 sq mt in Bandra East, adjacent to the Western Express Highway, would be thrown open for commercial exploitation.
Minister of state for housing Sachin Ahir told Business Standard: "The BDD chawl redevelopment will soon be forwarded to the state cabinet for approval.
"The government proposes to provide 4 FSI (permitted ratio between built area and plot size) for the proposed redevelopment.
"The modalities are being worked out."
He said a road map eas ready and there was no need to appoint consultants for implementation.
However, a senior government official, who did not want to be identified, said the government might explore the option of appointing state-run Maharashtra Housing and Area Development Authority as nodal agency.
"The project will be developed solely by MHADA or through a joint venture route, with participation of the private sector.
"The government may consider a formula whereby one-third each will be available for MHADA for affordable housing, a third for tenants and a third for the private developer," the official said.
According to the official, another option is to develop these chawls as clusters and allot tenants a self-contained 300 sq ft flat, double the size of their existing tenement.
Sunil Mantri, chairman and managing director, Mantri Realty Developers, said redevelopment of BDD chawls would be a game-changer for the city's realty sector.
"This will give tremendous opportunities for developers to join hands with MHADA and undertake development of a large area.
"Of the 20 mn sq ft salable area, nearly seven mn will be available for free sale to private developers." He said the government would need to implement this in a time-bound manner.
Lalit Kumar Jain, national president of the Confederation of Real Estate Developers' Association, said the project was a step in the right direction.
"This will lead to an increase in supply of stock and bring in market stability and price correction. However, this will be possible if the government does not jack-up land prices, whereby sale prices will never come down," he added.