Mumbai's virtual reality prices (read transfer of development rights or TDR) has spiralled to its 1995 levels on the back of the current realty boom. While till six months back, TDR transactions were in the range of Rs 450 to Rs 530 per square foot, a week back the rates have jumped to Rs 700 plus per sq ft.
According to the latest information available, a TDR transaction in Bandra has been completed at a rate of Rs 750 per sq ft.
Confirming this Mohammed Asif, senior manager, Knight Frank, said: "For instance, in Mulund as well as the Andheri Link road, where hectic developments are under way, TDR rates were at Rs 650 per sq ft less than a month back. Around 4-5 months ago, the rates were in the range of Rs 450-500 in the same region, owing to a glut in TDR availability."
Another developer from central Mumbai said: "TDR rates have breached the Rs 700 per sq ft mark in last 10 days. After 1995-98 when there was a realty boom and TDR rates were at even Rs 850 per sq ft, an overkill was witnessed with large quantities of TDR becoming available in the realty sector. This led to TDR prices registering a slum and the rates remained in the range of Rs 450 to Rs 530 per sq ft for several years till now."
He said that only two days back a broker had transacted a deal for TDR to be used in Bandra at a whopping Rs 750 per sq ft of slum TDR. Currently, in Mumbai there is around 600,000 sq ft of TDR (property on paper) available for purchase.
TDR, that is effectively property on paper, may be purchased by a developer like a realty being developed in Mulund where slum TDR at the rate of Rs 650 per sq ft was purchased.
Asif explains: "Essentially there are three varieties of TDRs available in Mumbai -- slum TDR that allows the buyer to load 100 per cent floor space upon the existing FSI of the land on which the TDR is being loaded. For example, a 20 acre plot of land was being developed by a builder in Mulund.
The plot had an FSI of 1 and the builder would have been able to develop around 8,70,000 square feet of realty. He purchased slum TDR at the rate of Rs 650 per square foot and loaded it on to this plot. Now he is able to effectively develop a FSI of 2 (17,50,000 sq ft of marketable space)."He adds that while for residential TDR, around 15 per cent of the land has to be reserved for open spaces, for industrial TDR the development plan (DP) stipulates a higher reservation for open spaces and road widening.