Kanakia Spaces Realty Signs ₹208 Crore Deal for Redevelopment of Borivali Buildings Under Cluster Redevelopment Policy

Kanakia Spaces Realty Pvt Ltd has secured the development rights for two housing societies in Borivali, Mumbai. The deal, valued at ₹208.53 crore, signifies a major redevelopment project under Maharashtra's cluster redevelopment policy. The agreement, which has brought attention to the real estate sector in Mumbai, was registered on September 12, 2024, with a hefty stamp duty of ₹11.40 crore paid by Kanakia Spaces Realty.

About The Project

The two housing societies, Shree Mohan Co-operative Housing Society Ltd and Shree Balwant Co-operative Housing Society Ltd, both located in the Govind Nagar area of Borivali, have long required redevelopment due to their aging infrastructure. Each building is over 50 years old, and with the constant urban growth in Mumbai, their redevelopment under the cluster redevelopment policy comes as a much-needed relief to residents. The Maharashtra government’s cluster redevelopment policy has been crucial in facilitating such projects, offering developers various benefits including additional Floor Space Index (FSI), which helps offset the cost of such redevelopment projects.

The first society, Shree Mohan CHS, is spread over 2.02 acres, with the current structure providing 70,616 square feet of living space to its residents. Under the redevelopment plan, the new building will have an additional 36% of RERA carpet area, expanding the total to 96,038 square feet. Each resident will not only receive a bigger flat but will also be allotted a dedicated parking space. 

The second society, Shree Balwant CHS, occupies 1.31 acres and offers a living space of 55,869 square feet. The redevelopment will add 45% more carpet area to the existing space, with a new structure providing 51 parking spaces for its residents. The added benefits are part of a wider effort to encourage redevelopment in Mumbai by ensuring that residents gain tangible improvements from such projects.

Key Financial Aspects

Kanakia Spaces Realty Pvt Ltd has made a strategic investment with the development rights for these two projects. The company paid a total of ₹208.53 crore for the deal, which includes a stamp duty payment of ₹11.40 crore. This substantial financial outlay highlights the real estate market's potential for redevelopment projects in Mumbai. Redevelopment deals like this not only serve as an opportunity to modernize the city’s aging housing stock but also as a lucrative business model for developers who can utilize unused FSI to generate profits from selling additional housing units in the open market.

In terms of incentives for residents during the redevelopment period, tenants from both buildings will be provided a monthly rental of ₹60 per square foot for the duration of the project. This is a crucial factor as it ensures the residents are compensated fairly while their homes undergo reconstruction.

Timelines and Execution

According to the development agreement, the project timeline is divided into two phases. First, the redevelopment of the existing buildings, which is expected to take around 36 months. The complete project, including the saleable component, must be finished, and the occupancy certificate (OC) must be obtained within 66 months.

This timeline, while ambitious, is typical for large-scale redevelopment projects in Mumbai. However, the growing pressure on developers to meet deadlines without compromising quality remains a significant challenge in the city. Given Kanakia Spaces Realty’s reputation and experience, the project has a strong foundation to achieve these goals.

What is Cluster Redevelopment Policy?

The cluster redevelopment policy allows developers to merge multiple plots or housing societies into a single redevelopment project. This policy is particularly beneficial in Mumbai, where several older buildings are closely packed in prime locations. By merging plots, developers can create a larger project, benefiting from additional FSI and government exemptions.

In May 2023, the Maharashtra government introduced a 50% premium waiver for real estate developers under the cluster redevelopment policy. This waiver, available for one year, has spurred increased interest in redevelopment projects across Mumbai as developers are offered more financial incentives to take up challenging projects.

Mumbai’s Redevelopment Wave

Kanakia Spaces Realty is not alone in capitalizing on the redevelopment trend in Mumbai. Other major developers, such as Macrotech (operating under the Lodha brand), Rustomjee Group, Puravankara, Ajmera, and MICL, have also been actively pursuing redevelopment deals. For instance, in 2023, Macrotech signed a ₹359.48 crore development agreement for a slum rehabilitation project in Mumbai’s Worli area.

This increasing trend highlights the massive demand for modern housing in Mumbai and the willingness of developers to invest in redevelopment as a sustainable business model. With the government providing attractive incentives under the cluster redevelopment policy, more such projects are expected to materialize in the coming years.

The ₹208 crore deal by Kanakia Spaces Realty marks another important chapter in Mumbai's real estate development story. As old structures make way for modern buildings, residents and developers both stand to benefit from improved living spaces and lucrative business opportunities. With Mumbai’s skyline continually evolving, redevelopment remains one of the most viable ways to address the city’s housing challenges.