Emerging Consultant Start-ups in Maharashtra

NEW FINANCING OPTIONS FOR
SELF-REDEVELOPMENT
In a bracing and timely new trend, progressive
consultancies offering specialised services and financial
assistance for the housing sector are beginning to make
their mark on the Indian residential real estate landscape.
For instance, many consultancies offer rental deposit loans
to young professionals who prefer to rent rather than buy
properties. Via these consultancies, they can secure loans to
pay the security deposit which can equal up to 8-10 months’
rent advance. Unlike in personal loans, the principal
payment is made directly to the landlord and returned to the
consultancy when the lease agreement ends. The tenant
pays interest through the lease tenure.
However, an even more exciting service being offered these
days is self-redevelopment funding and management. Firms
that offer such services to housing societies are becoming
very relevant in cities like Mumbai. Rather than involving a
developer to carry out the redevelopment, housing societies
can outsource the entire task to expert consultancies to both
finance and manage the redevelopment process according to
exact needs and specifications.
The scope of services offered by such consultancies goes
beyond just redesigning and construction and extends to
handling the associated manpower management and
paperwork, dealing with government agencies and even the
sale of extra flats based on the FSI and TDR available to the
housing society.
While banks and housing finance companies are currently
not keen on granting loans to developers, individual
societies opting for self-redevelopment can still access
finance via these companies.
An increasing number of housing societies in ageing
projects are considering of taking the self-redevelopment
route. With the help of specialized services, these societies
can not only avoid the risk of delays by developers but also
access cheaper loan rates.
A society opting for self-development can get a loan for
relatively lower interest rates like 12.5%, as opposed to
loans to developers which can attract interest rates in
the region of 20%.
In the past, the only real option for such housing societies
was to entrust the entire redevelopment project to a
developer. Today, self-development by housing societies
has become a real possibility – and they can now avail of
specialized support.
We are likely to see more such consultancies entering the
fray as the trend of self-redevelopment becomes more
prevalent, especially with various state governments
making policy changes to promote self-redevelopment. In
fact, this new sector would open up in all earnest if selfredevelopment
projects are given more tax exemptions.
The number of buildings that need to redeveloped in the
Island City is constantly rising. Just before the onset of
monsoons this year, Maharashtra Housing and Area
Development Authority (MHADA) identified more than
14,000 buildings within Mumbai as dilapidated
structures which needed to be redeveloped with no further
delay.
In other words, the opportunities for such consultancies is
on the rise. Apart from Government support, they are
perhaps the most important link to successful selfredevelopment
in cities like Mumbai. They radically
empower housing societies to take charge of the
redevelopment of their societies based on their preferences
and needs, providing a 360-degree, streamlined
redevelopment process.
Self-redevelopment of housing projects does not only give
housing societies the assurance of time-bound, costcontrolled
and predictable results. It also brings down
the cost of surplus apartments, as opposed to the price
inflation which results when a developer with the sole
objective of hefty profit margins is involved. In other
words, housing societies which self-redevelop their
premises can sell the resulting extra flats at lower and more
competitive rates.
Considering the various benefits such services bring to the
table, a transparent and consolidated management fee – as
opposed to the often-gargantuan cost and time overruns of
an unplanned or mercenary approach to redevelopment – is
indeed a price worth paying. Redevelopment needs to
become an exact science, and the industry looks forward to
more and more such specialized players coming to the fore
to help increase competitiveness in pricing, and overall
efficiency.
20
October 2019|