Builders Hit Hard By Court Ban On New Construction In Mumbai 

Developers in Mumbai say they are staring at cost overruns and revenue losses more than a year after a court order banned new construction in the city over poor management of solid waste.

Proposals for residential, commercial and redevelopment projects worth nearly Rs 2,000 crore have been stuck since March 1, 2016, a day after the Bombay High Court took the action holding the state and the civic body guilty of lapses in compliance of rules governing garbage disposal.

“This stay (by the high court) is impacting members of real estate and society redevelopment. This is mainly affecting the redevelopment in city and suburbs,” said Mayur Shah, president of Credai-MCHI, an umbrella body of builders.

Mumbai has three dumpyards, the biggest one at Deonar. Two more are up north at Mulund and Kanjurmarg. The city processes less than half of its 8,000 tonnes of daily solid waste it generates at the only processing centre at Kanjurmarg. The rest, according to the high court, is illegally dumped.

While the high court eased the conditions for new hospitals and educational institutes, Shah said nearly 85 percent of the proposals are for development of old and dilapidated buildings. The developers have moved the Supreme Court and the top court is expected to hear their special leave petition in the next four to five months, he said.

Being a largely unorganised sector, developers said it would be difficult to assess the increase in project costs and losses in revenue caused by the delay in clearing new proposals. The court ban has affected supply and 300 to 400 developers are stuck with new proposals, said Hitesh Thakkar, secretary of the Maharashtra chapter of the National Real Estate Development Council.

This also means that the corporation and the state governments are losing revenue in the form of taxes and other duties, he said.

The sector is particularly concerned about the uncertainty surrounding several redevelopment proposals. “We have gone to the Supreme Court against the order because thousands of old buildings that require redevelopment and greenfield projects are badly stuck,” said Shah.

Both Thakkar said Shah stressed that projects that have already come up with plans for waste segregation should be given the green signal. “Our point is that all greenfield projects come up with such plans. So, they won't contribute to the garbage,” said Shah.

Relief In Sight?

A senior official from the Brihanmumbai Municipal Corporation told BloombergQuint that the corporation has already submitted to the high court a blueprint for solid waste management for Mumbai. The official from the solid waste management department declined to share the details saying it was for the court to decide.

Among their ongoing efforts, the official said requesting anonymity, the BMC has invited tenders for garbage processing at the Deonar dumping ground and has been communicating with housing societies on waste segregation.

Rajeev Piramal, vice chairman and managing director of Peninsula Land, expects a positive outcome. “A lot of developers and developer bodies have approached the corporation and we strongly feel that some solution would come up in coming months.”

Agrees Vikas Oberoi, chairman and managing director, Oberoi Realty Ltd. He expects the court to lift the restriction once the corporation comes up with a concrete plan. “And it's all for a better Mumbai.”