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Developer Redevelopment

The clinical model being followed over decades in Mumbai whereby developer leads the entire process that starts with obtaining the approvals, constructing the new building, sales of additional flats and rehabilitating existing members into new flats having additional area.

Developer Redevelopment

Key Stages

key stages
  • Conveyance of land -obtaining property title in the name of society from the previous owner/promoters and updating the property card
  • Architect- PMC appointment- invite proposal from known architect PMC based upon reference or through floating of tender and appoint appropriate consultant.
  • Feasibility study – structure the project cost and revenue in a manner to maximize benefits for the society
  • Design Development- based upon the area finalized, unit plan and layout will be prepared for the members suggestion-objection/ approval.
  • Obtain title search report and preparation of various under takings required for the  IOD
  • Obtain individual members written consent for self-redevelopment and funding,
  • Equity finance- preparation of the detail project report for raising equity finance and explore the probable structure of equity finance like through under writing, SPV, land mortgage, bank letter/guarantee.
  • Debt funding- obtaining principal loan approval based upon project report from scheduled /co-operative/nationalised banks.
  • Accountancy and book keeping- register the society under direct and indirect tax frame work, appoint a dedicated accounting team at site for book keeping and accountancy.
  • Design Development, IoD or Building permission- Prepare the unit plan and layout based upon the finalised area getting in principal approval and concessional approval from MCGM building proposal and development plan department and municipal commissioner
  • Appointment of contractor- Prepare detail BOQ and estimate for preparation of tender based upon the latest MCGM /PWD schedule of rates and specifications as finalized by the general body under design development stage. Floating a tender with detail estimate, good for construction drawings, scope of work, escalation, selection method etc.
  • RERA-obtain the RERA registration and upload all the relevant documents including CC
  • Vacating the premise-on the receipt of IOD and after appointment of contractors.
  • Sales and marketing- prepare comprehensive sales strategy in line with construction outflow and minimum loan requirement with pricing strategy and sales volume based upon the market research. Prepare comprehensive vendor management plan and provide required material for marketing.
  • Further approvals-obtain the necessary approvals in timebound manners for smooth execution/construction of the project
  • Construction monitoring- Ensuring material and structure quality, workmanship, design implementation, progress monitoring for timely qualitative construction of project
  • Possession-after obtaining necessary permissions such as municipal water supply connection. sewage connection, fire compliance certificate, lift compliance from concerned agencies, developer gets OC from BMC and enrol the new members to CHS

Responsibility matrix

Matrix image

Precautions to be followed in conventional method

  • Ensure land title is clear and is in the name of CHS
  • Appoint a professional architect PMC for hassle free transition and technical knowhow
  • Prepare comprehensive policy defining methodology for, calculation of members existing carpet, bid methods, methods for developers, parameters for the quality control and quality check, etc.
  • To avoid conflicts between members, ensure the comprehensive policy is first approved and then implemented.
  • Self-redevelopment objective is to deliver quality homes to the members and not making profits
  • Rather being pricey and paying interest on project cost in sluggish market it’s better to offload the inventory and save the interest cost.
product flow chart
Self Redevelopment

Self Redevelopment

Becoming popular in a short span of time, a lot of society members are getting attracted towards self-redevelopment as it provides more benefits than conventional redevelopment to existing occupants. However self-redevelopment comes with certain degree of risk.


List of incentives being offered by government to promote Self-Redevelopment, through GR dated 13th September 2019. This incentives are for more than 30 year old society opting the path of self-redevelopment.

 

  1. Single Window clearance for approvals with in 6 months time frame.
  2. Additional FSI or Carpet Area of 10%
  3. Additional FSI (Free) for the projects located on less than 9.0m wide road.
  4. Relaxation in premium, open space deficiency and premium instalment facilities.
  5. Rebate in the TDR
  6. Relaxation under LUC for society who finish the project within stipulated time frame.
  7. Stamp duty of Rs 1,000/- in line with the PMAY registration guidelines
  8. Tri-Party agreement between, contractor, bank and lender.
  9. Monitoring committee of two society member and one member from financial institutions.
  10. Related guidelines on appointment and scrutiny of contractor and action against him.
  11. Relaxation on GST

 

However, detail procedural guidelines are yet to be issued by each of the department based upon the above stated GR. You can download the copy of GR by clicking here

Key Stages

key stages
  • Conveyance of land-obtaining property title in the name of society from the previous owner/promoters and updating the property card
  • Architect- PMC appointment- invite proposal from known architect PMC based upon reference or through floating of tender.
  • Feasibility study-preparation and benchmark offer document before floating tender for redevelopment. (link to services: feasibility study)
  • Tender floating-preparation of tender document and floating it through media advertisement
  • Developer selection-going through bids of various participants based upon their past experience, project performance and financials. Evaluating their offer with feasibility report and selection of developer in front of CHS registrar by general body
  • Developer agreement-entering into an agreement with the selected developer through legal contract as defined in tender document
  • Design finalisation-finalising design prepared by developer's architect based upon tender
  • IoD-getting in principal approval and concessional approval from MCGM building proposal and development plan department and municipal commissioner
  • Vacating the premise and CC-moving to temporary rental accommodation for the timebeing to allow developer to reconstruct new premises in due time. Demolition of existing building and obtaining commencement certificate
  • Construction monitoring-Ensuring material and structure quality, workmanship, design implementation, progress monitoring for timely qualitative construction of project
  • Building completion-inspection of redeveloped building during the final stages to monitor finish quality
  • Possession-after obtaining necessary permissions such as municipal water supply connection. sewage connection, fire compliance certificate, lift compliance from concerned agencies, developer gets OC from BMC and hands over possession of the building to CHS

Responsibility matrix

Matrix image

Precautions to be followed in conventional method

  • Ensure land title is clear and is in the name of CHS
  • Appoint a professional architect PMC for hassle free transition and technical knowhow
  • Prepare comprehensive policy defining methodology for, calculation of members existing carpet, bid methods, methods for developers, parameters for the quality control and quality check, etc.
  • To avoid conflicts between members, ensure the comprehensive policy is first approved and then implemented.
  • Ensure flat area of existing members are finalised before floating of tenders as defined in policy document.
  • Ensure developer selection process is clearly mentioned in the tender document along with step-in right in case developer abandons the project midway, rent component, prevailing and future tax liabilities on CHS members and developers, provisions to derive benefits arising out of changes in regulations
  • Invite developers for pre-bid discussion and clarify doubts about land title, existing flat area of individual member, terms pertaining to future taxation, change in regulation, stamp duty payment among others
  • Issue tender corrigendum if required based upon the response of the interested developers who participate in pre-bid discussion
  • Thoroughly checking developer's on-ground performance and report the same in-line with respective offers to general body for decision making
  • Avoid negotiation post appointment of developers and focus on execution of agreement and finalization of design
  • Ensure written communication with the developers and keep minutes of meeting for each meetings
product flow chart

Neo Redevelopment

An emerging approach, neo-redevelopment offers more power to society members as it negates risk factors associated with conventional and self-redevelopment models.

Neo Redevelopment

Key Stages

key stages

  • Conveyance of land-obtaining property title in the name of society from the previous owner/promoters and updating the property card

  • Architect- PMC appointment- invite proposal from known architect PMC based upon reference or through floating of tender.

  • Feasibility study-finalise additional area based upon project financial structuring with zero or minimum corpus. Developer will quote the corpus based upon his estimation.

  • Design Development and IoD-Prepare the unit plan and layout based upon the finalised area and getting in principal approval, concessional approval from MCGM building proposal and development plan department and municipal commissioner

  • Tender floating-preparation of tender document with design and basic estimation and floating it through media advertisement

  • Developer selection - going through bids of various participants based upon their past experience, project performance and financials. Evaluating their offer with feasibility report and selection of developer in front of CHS registrar by general body

  • Developer agreement - entering into an agreement with the selected developer through legal contract as defined in tender document

  • Vacating the premise and CC - moving to temporary rental accommodation for the time being to allow developer to reconstruct new premises in due time. Demolition of existing building and obtaining commencement certificate

  • Construction monitoring-Ensuring material and structure quality, workmanship, design implementation, progress monitoring for timely qualitative construction of project

  • Building completion-inspection of redeveloped building during the final stages to monitor finish quality

  • Possession-after obtaining necessary permissions such as municipal water supply connection. sewage connection, fire compliance certificate, lift compliance from concerned agencies, developer gets OC from BMC and hands over possession of the building to CHS

key stages

Key benefits of the neo- redevelopment

  • Clear visibility about the design of the flat, amenities, specification, parking and overall projects.

  • Opportunity to float the tender with complete IOD compliance drawing, enhance the clarity of the bidders.

  • Least risk due change in government policy and development control regulation, etc.

  • Flexibility to switch between self redevelopment or developer redevelopment.

  • Least risk of deviation between offer and actual (design and post construction)

Responsibility matrix

Matrix image

Precautions to be followed in conventional method

  • Ensure land title is clear and is in the name of CHS

  • Appoint a professional architect PMC for hassle free transition and technical knowhow

  • Prepare comprehensive policy defining methodology for, calculation of members existing carpet, bid methods, methods for developers, parameters for the quality control and quality check, etc.

  • To avoid conflicts between members, ensure the comprehensive policy is first approved and then implemented.

  • Ensure flat area of existing members are finalised before floating of tenders as defined in policy document.

  • Ensure developer selection process is clearly mentioned in the tender document along with step-in right in case developer abandons the project midway, rent component, prevailing and future tax liabilities on CHS members and developers, provisions to derive benefits arising out of changes in regulations

  • Invite developers for pre-bid discussion and clarify doubts about land title, IOD, Design requirements, terms pertaining to future taxation, change in regulation, stamp duty payment among others

  • Issue tender corrigendum if required based upon the response of the interested developers who participate in pre-bid discussion

  • Thoroughly checking developer's on-ground performance and report the same in-line with respective offers to general body for decision making

  • Avoid negotiation post appointment of developers and focus on execution of agreement and finalization of design

  • Ensure written communication with the developers and keep minutes of meeting for each meetings