Stalled projects in Bangalore means hundreds of crores of stuck investments

BENGALURU: As many as 100 real estate projects are stuck in Bengaluru as a fallout of the confusion that grips the proposed transferable development rights (TDR) policy. Not a desirable situation for developers when the real estate sector is witnessing a slowdown in sales.

The stalled projects translate to hundreds of crores of investment on land. “About 100 files are pending with BBMP for sanction due to the TDR issue,” JC Sharma, president at Credai, Bengaluru, an industry lobby, told ET. “The last sanction with TDR was given in September 2015, with a setback relaxation on incremental height basis,” he said.

The officials have kept on hold plan approvals in cases where TDR is applied. The officials are not taking a call as they think the existing TDR rules are outdated while the government is showing no urgency to announce the new rules, the draft of which was notified on February 9.”Builders who bought TDRs on earlier valuations should not feel cheated. Any changes should only be prospective,” said MR Jaishankar, chairman, Brigade Group.

The real estate market in Bengaluru, considered one of the most resilient in the country , is cooling off due to a mismatch between buyers’ expectations and the property value of the existing stock.

Property transactions in the city i have fallen by as much as 30% in the past three quarters due to slow job creation and low salary increases at software firms.

The TDR concept, according to Sharma, was introduced to save money on land acquisition and to ensure proper monetary compensation for the land loser. It was meant to be a win-win situation for the government, land loser and developers buying the TDR. “The guidance value is not based on any scientific method. In many areas, the guidance value does not reflect the market value,” he said.

Credai has, instead, proposed that the government keep three slabs at a fixed value rather than linking to the guideline value. Puravankara Projects MD Ashish Puravankara said he hoped the government will notify the new TDR rules soon so that the industry will benefit from faster clearances.

Shantappa Honnur, a former director of Town Planning, said a delay in notifying the TDR policy will harm the city’s interests. “No point in floating a concept and not doing anything about it. The government must immediately end the confusion in the interest of Bengaluru,” he said.

Mahendra Jain, Principal Secretary at the Urban Development Department, said the government is trying to speed up the process and will soon take a final call on the policy. The new TDR policy was approved in June 2015 after an expert committee recommended a policy rehaul.

For the past 10 years, the state government has taken the TDR way to make land acquisition simple and cost-effective. TDR refers to the grant of additional built-up area to a landlord in return for land taken from him for a public project. TDR is transferable too.

Credits ET Realty

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