In a significant power shift within Mumbai's dynamic real estate landscape, housing societies planning to redevelop their ageing buildings are now calling the shots. Tired of being on the back foot, these resident groups are aggressively negotiating with builders, often pushing for benefits that market watchers label as unrealistic.
The New Demands Reshaping Redevelopment
According to detailed market analysis, societies are now demanding additional area, hardship compensation, and displacement amounts that are a substantial 15% to 25% higher than what the current market can realistically support. Beyond the standard compensation for displacement and matching area, many are insisting on excess amenities and significant hardship payouts for each member.
In numerous instances, these expectations are stretching beyond the realm of feasibility. Societies are asking for large additional areas, hefty displacement payouts, and premium-grade finishes that significantly impact project budgets.
A Herd Mentality Inflating Benchmarks
A prominent property market watcher identified a herd mentality as a key driver. When a few societies in a particular locality secure a high offer, others immediately assume that figure has become the new baseline. This ignores critical factors like FSI (Floor Space Index) profile, zoning constraints, and the unique financial viability of each plot.
The widespread sentiment that developers have aggressively returned to the market post-2022 has led to these inflated benchmarks, particularly across Mumbai's western corridor. Specific examples highlight the gap between expectation and reality:
- Between Bandra and Juhu, societies expect alternate accommodation rents of Rs 225 per square foot, while the prevailing market rate is between Rs 150 and Rs 175 per sq ft.
- Individual corpus funds, which are ideally between Rs 3,000 to Rs 3,500 per sq ft (carpet area), are now being sought at a rate of Rs 4,500 to Rs 5,000 per sq ft.
This trend is especially visible in micro-markets like Khar, Santacruz, Andheri, and Goregaon, where redevelopment activity has intensified over the last couple of years. Even societies in Borivli and Kandivli, traditionally known for mid-segment projects, are now quoting expectations comparable to premium areas like Vile Parle or Juhu.
Expert Warnings and Market Realities
Sanjay Daga, CEO and MD of Anex Advisory, noted that rising aspirations and evolving lifestyles are influencing how societies approach negotiations. While the buoyant market fuels these expectations, developers are bound by strict feasibility parameters shaped by fluctuating land economics, construction costs, and market absorption rates.
Daga emphasized the importance of societies assessing a developer's track record rather than being swayed solely by the highest offer. An initially lucrative proposal can prove far costlier if project delivery fails. He advocates for a balanced approach, recognizing the legitimate concerns of both parties.
Echoing this sentiment, developer Ram Raheja confirmed that his firm consciously steps away from tenders where the numbers stop making economic sense. He revealed that this trend has emerged largely because certain developers, seeking a strategic entry into a new micro-market, are willing to offer terms that stretch standard feasibility norms to compete with established players.
Experts point to two main reasons for this situation: perception and partial information. Societies often hear about record-breaking deals and apply the same numbers to their property without understanding the underlying economics. Social media, word-of-mouth comparisons, and anecdotal references to marquee projects have created a bubble of expectations.
A critical point often missed is that land economics can shift drastically within a few kilometres. The feasibility of a redevelopment deal depends on FSI potential, construction cost, sale value, and market absorption, not just the perceived brand value of a location.
A new and concerning trend is societies expecting 70–80% of the FSI share for members, a significant jump from the earlier 35–40%, while still assuming the developer can make the project financially viable.
Market experts warn that when societies over-quote or demand unrealistic areas and payouts, credible developers step back. This creates a vacuum often filled by smaller players with limited capital, who make aggressive promises but lack the financial depth to deliver, ultimately leading to stalled projects and delayed possessions for residents.
