CIDCO sells land parcels worth 256 crore in Navi Mumbai

Navi Mumbai’s development authority, City and Industrial Development Corporation of Maharashtra Ltd (CIDCO), has sold eight land parcels in the city via an auction amounting to Rs. 256 crore, according to sources.

Out of the total eight land parcels, seven are residential-cum-commercial usage plots at Nerul and a commercial plot in CBD Belapur. Highest bids for these land parcels were received in the range of Rs 1.55 lakh to 2.05 lakh per sq meter, confirmed a CIDCO official.

“Such high bids offered for these plots indicate that various infrastructure developments across Navi Mumbai, especially the upcoming Navi Mumbai International Airport is being priced in,” said Rajesh Prajapati, Managing Director of Prajapati Constructions.

Last year In May, Cidco had sold several plots in Nerul for around Rs 2.82 lakh per sq ft, which is the highest bid price for any land parcel in Navi Mumbai till date.

Inorbit mall in Vashi is illegal

On Friday, The Bombay high court stated that CIDCo (City and Industrial Development Corporation) was irregularly allotted the 31,000sq m of land in Vashi. Star hotel and Inorbit mall. The bench of Justices A. S. Gadkari and Abhay Oak said that the developer could apply for CIDCo for regularization in this period.

Earlier, CIDCo had issued the showcase notice to the developer in current month, asking why the allotment should not be cancelled. The state-appointed D K Sankaran panel, which probed the matter, had also said in its report in 2005 that the allotment should be cancelled. The land in Vashi, on which Four Points hotel and Inorbit Mall stand, to K Raheja Corp and directed the developer to “hand back vacant possession” of the land to the planning agency in next six months.

While checking the lease agreement between developer and CIDCo, it’s clear that developer illegal directed that land be “restored”, and later the court rejected the developer’s plea on stay the order for 12 weeks. It is also said that since it has given six months’ time to developer to vacant the possession, now developer has a choice to go for appeal. The court stated, no third-party interest should be created during this period.

The Inorbit Mall and hotel were built in 2008-2009, a total of 11 plots opposite Navi Mumbai railway station, which comprised a total area of 31,000sq m, were allotted by CIDCo to K Raheja Corp in 2003. While in 2004, two PILs were filed in HC by stating that land had been given at cheap rates without issuing tenders and later the HC clubbed the PILs together as they were similar.

The counsel of  V A Gangal, for the developer stated that “We will not depend on the mercy of CIDCo to regularize our land but will move the apex court, as my clients had followed all the rules to construct the shopping mall and hotel after a legal stay was earlier vacated. The total cost f construction was more than Rs 450 crore, currently, land involves 2,000 employees and 150 retailer shops it means more than 8,000 peoples livelihood will be affected. So it is also a human problem”.

The panel of D K Sankaran reported that CIDCo had suffered a loss of nearly Rs 50 crore because of this allotment which was “in gross violation of rules, CIDCo constitutional norms and policy. According to policy, after cancellation of allotment, the land “needs to be disposed of by inviting tenders and recommended the strong action against the then MD of CIDCo and other officers who dealt in the same file.

However, Gangal said that developer had paid Rs 31 crore for the land and it is more than the market price in 2003, and the IT land and later it had been converted in to commercial at that time as there had been no takers for it. Gangal further said that the Supreme Court had, in a similar case, and HC to take a ”pragmatic” view and directed, if there were any losses caused so it could be recovered from the developer.

CIDCo had terminated the services of one of GM in 2011 for allegedly showing undue favors to the developer and later he admitted in an affidavit in HC in September 2014, that the allotment was “arbitrary and illegal.” According to Thakur, This judgment is good and will send out a strong message to other developers. In past CIDCo had made the mistake of giving prime plots to a single builder at very low rates without tenders.  In the first half of 2014, the HC had allowed activist Sandeep Thakur to intervene in the PIL because two original petitioners were absent. The court also appointed lawyer M S Karnik as amicus curiae (friend of the court) in the matter.

The bench of High Court, also appreciated the efforts of the intervener, Thakur, and the amicus curiae, Karnik. High Court also asked to CIDCo to pay Rs 50,000 to the original petitioner because of land irregularities.

Increasing the speed of redevelopment

As the speed of rebuilding of ceased structures by MBRRB was not adequate enough to cover the entire ceased structures in the Island City of Mumbai, Government decided upon involving tenants, landlords and private developers for increasing the speed of redevelopment.

As per Development Control Rules FSI or Floor Space Index is the area of construction permitted on a particular land. Permitted FSI in Mumbai depends on various factors such as land’s location, kind of current residence and the project to be developed.

Because of the conflicts between while Navi Mumbai Municipal Corporation (NMMC) and City and Industrial Development Corporation (Cidco) board over the FSI rates, Government of Maharashtra is indecisive over finalizing the FSI for redevelopment of dilapidated buildings in Navi Mumbai area. NMMC has offered 2.5 FSI previously, whereas Cidco board agreed upon 3 FSI. Government has to select either of the two choices or find an agreeable solution.

Each of these proposals has their pros and cons. Though Cidco’s offer may look more convincing and transparent to the residents and they also state that their proposal will generate housing stock for economically weaker section but it also comes with the condition that members of the society will not have the right to choose their developers.

As per NMMC, 3 FSI proposed by Cidco will produce infrastructure problem for the city. On the other hand, Cidco says that NMMC’s proposal will be more helpful to developers rather than occupants. This way the developers will load the property buyers with added cost as they have to pay premium for Free of Floor Space Index Area.

Navi Mumbai Airport project

After the original rehabilitation component of the Navi Mumbai Airport project hit a roadblock, it has now been decided to handover 5 hectare of land in Panvel for rehabilitating the project affected people. The decision was taken after a major portion of the 57 hectares of land, meant to relocate project affected people (PAP), had been classified as no-development land, following a change in coastal area protection norms.

The Navi Mumbai Airport is one of the six projects that have been allowed to be constructed on CRZ-1 land under the 2011 notification. The state government has now asked that the exemption granted to the core airport land be extended to the 57-hectare land in Wadghar village meant to rehabilitate PAPs. The Ministry of Environment and Forest (MoEF) is yet to take a decision on freeing land from CRZ restrictions, despite the state government’s recent representations to the Prime Minister’s Office and the ministry.

Besides, the airport project rehabilitation plot, a total of 1,240 hectares of land in Navi Mumbai, has also been affected by CRZ-1 for the past two years, resulting in a potential loss of Rs 37,200 crore. Wadghar is one of the three villages in Navi Mumbai where people from the 10 villages affected by the airport project will be shifted to.  Notwithstanding the opposition of a few project-affected persons (PAPs) to the acquisition of land for the proposed Navi Mumbai International Airport in Panvel, Cidco has quietly started ground levelling work at the site. A source said, “We don’t want to wait for those who are adamant in spite being offered the best compensation.” The package offers PAPs 22.5% of the developed land, with an FSI of 2. Affected villagers will get pakka houses and their unemployed youth will be given vocational training. Joint MD of Cidco V Radha said Cidco has tied up with the ICICI Bank, TCS, NIFD and Taj catering, among others, for the training programme. Cidco has identified 3,500 unemployed youth. “We have been conducting their aptitude and psychological tests to know their interests, as per which they will be enrolled in state-subsidised courses. They will also get stipend. We are tracking their academic record and, as per the findings, changes will made in the programme,” she said.

Traditionally, in Navi Mumbai, the High Tide Line (HTL), which is the marker of CRZ-1, has been delineated on the basis of bunds and flapgates. Following the Coastal Regulations Zone (CRZ) notification of 2011, which classifies coastal land as CRZ-1 based on its salinity concentration, the Wadghar land has been rendered into a no-development plot. The land is one of the many that was acquired by the Navi Mumbai’s planning agency CIDCO.

Now builders are targeting the existing structures in Mumbai, which are either in bad condition or dilapidated because centers of Mumbai is running out as there is no more space for residential development. But still it’s a big question, is it better idea to invest in these properties for redevelopment as down payment is very high in these areas (Approx. 50 per cent).

As per the research on seller or buyer sentiments, who belongs from west and south India most of the people raise their query about investment prospects in existing buildings or re-developed projects. Redeveloped projects are in the good flow of demand as they are like modernization of the area with new infrastructure. Before investing in existing buildings buyer should check the background of the developers as these properties comes with several risks in respect to FSI such as; government approvals and conversion regulations.

On side, where investment in re-developed infrastructure can be beneficial for buyer or end user, the same can be risky for investors, who are looking for capital appreciation. The opportunities for capital appreciation much less in established localities in comparison of areas where there is huge potential for new infrastructure planning. Some areas in Mumbai like; Khar, Bandra and Santacruz are already saturated and developed with property cost in a range of Rs 18,000-44,000 per sq ft whereas, other areas like; Navi Mumbai and Vashi is still in the development stage in terms of re-development, infrastructure and connectivity .

CIDCO (City and Industrial Development Corporation) has allowed FSI up to 2.5 for new affordable housing buildings and it is expected that these buildings will be able to get a better scope of appreciation for those investors, who are looking for capital gains as well as the base value. In general re-developed infrastructures require more investment from consumers as builders, who are involved in re-development projects can ask for more down payment and it can range up-to 60 per cent of the total value. Most of the matured commercial and residential areas are undergoing for re-development in Mumbai to bring new supply of buildings for catering the needs of people, now end user can find multiple way to invest in these properties to earn maximum profits.