Builders and developers of IT/ITeS parks in Mumbai Metropolitan Region are in for a windfall, courtesy a state government resolution making changes in the FSI rules for IT/ITeS parks. The industry department of the Maharashtra government issued a resolution on May 3, 2007, to facilitate setting up of establishments providing financial services on plots where IT/ITeS parks are being developed.
The resolution enables builders to make a much more profitable use of 100% extra floor space index (FSI) granted to them for IT/ITeS parks. A certain portion of this extra FSI can be used by the builders for establishments to provide financial services such as banks, insurance companies, securities and mutual funds.
The decision is applicable to private and public IT and ITeS parks in the Mumbai Metropolitan Region only. “The decision is mainly to promote Mumbai as an international financial centre and also enable builders to make a viable use of 100% additional FSI allotted to them as a matter of state’s IT policy,” an industry official told ET.
However, the decision is likely to help the builders who can demand and secure a higher rental rate from the financial services industry. “Establishments like banks or insurance companies will happily shell out much higher rentals to the builder than IT companies. At the same time, the 100% extra FSI allotted to the builder for IT/ITeS park will become profitable, “an official said explaining the fine print.
For instance, in Mumbai, foreign brokerage houses have paid about Rs 400 per square foot for property in Worli, a few kilometres from Nariman Point.
In contrast, IT companies in Mahape, in Navi Mumbai are paying just about Rs 65-75 per square foot as lease rentals.
Half the area must have IT’ITes units
The state came out with a revised IT policy in 2003 applicable to existing as well as new IT/ITeS parks. The policy grants 100% additional FSI to all IT/ITeS units in the state in public IT parks. In private IT parks, additional 100% FSI can be obtained by paying a premium. Additional FSI will be granted over and above the applicable FSI in a particular city.
In Greater Mumbai, the applicable FSI is 1.33. In May 2006, the government made further amendments to the IT policy. The government ruled that 60% of permissible area for construction must be used for IT/ITeS units in an existing IT/ITeS park while the remaining 40% must be utilised for incidental and support services such as restaurant, gymnasium, club house, guest house etc. For the new IT/neS parks (post-2003 parks), the area designated for IT/ITeS industries was raised to 80%.
Now, the government has made an exception to the 2006 rules for Mumbai metropolitan region. Of the 60% area designated for IT/ITeS units, the builder can now use 10% for establishments providing financial services. In the new IT/ITeS parks, a builder can rent out 30% of the permissible 80% area for financial services. The government, however, has ruled that 50% of the permissible area for construction in both existing and new parks must be used for IT/ITeS units.
The amendment to the FSI rules has enthused prominent builders, who have proposed IT/ITeS parks in Mumbai. Niranjan Hiranandani of Hiranandani Developers, which is setting up an IT park in Powai, said: “It’s a very positive development which will give developers more marketing strength”.
Dilawar Nensey, joint MD, Royal Palms, which has planned to develop an IT SEZ in Mumbai, welcomed the move but said it won’t exactly help developers get more rentals as is being perceived. “It makes sense to have financial services along with the IT/ITeS parks since IT is an integral part of all financial services. From the developers’ point of view, the move is significant since it would add to their financial muscle, ” Mr Nensey told ET.
Source: The Economic Times
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