Coastal development on the cards

Will the CRZ notification, 2011, fast-track the real estate development in coastal areas? Subhajit Roy does a realty check
 
The new coastal regulation zone (CRZ) norms are sure to open up huge development potential for real estate sector across the country, as it allows slum development and a floor space index (FSI) of 2.5, in costal areas. Earlier, slum development activities were not permitted in CRZ areas and the FSI allowed was 1.33.
 
The CRZ area, as defined by the environment ministry, is the stretch within 500 metres of the high-tide line, on the landward side. Under CRZ I, the construction of roads, approach roads and missing link roads is allowed on stilts, to ensure free flow of tidal water. Under CRZ II, building development will now be allowed on the seaward side of the CRZ stretch, with separate provision for slum rehabilitation with FSI, in accordance with existing regulations (maximum 2.5 times + TDR) and a government stake of 51%, in such projects.
 
“The recently announced CRZ notification provides the required impetus for redevelopment of slums and dilapidated buildings, along the coast line. The CRZ notification also rightly requires government participation, to protect inhabitant’s interest. However, the proposed structure may have certain limitation, as the government/government bodies may not be willing to deploy financial resources, to own 50% in all slum rehabilitation projects. This ownership structure may also limit developer’s flexibility. Though the notification maybe a step in the right direction, more clarity would be required for successful implementation,” says Imran Shaikh, Associate Director – Strategic and Commercial Intelligence, KPMG.
 
To safeguard against corruption, the Right to Information Act (RTI) will be applicable to the projects developed under the new CRZ norms. The notification makes it clear that the schemes of the Slum Rehabilitation Authority (SRA) will be undertaken through companies, with a 51% or more government stake and the Ministry of Environment and Forests will have the right to appoint statutory auditors, for the redevelopment of dilapidated, cessed and unsafe buildings. However, projects under the SRA scheme will be audited by the Comptroller and Auditor General (CAG).
 
“The changes in the CRZ regulations for SRA and tenant redevelopment projects will, no doubt, ease some of the supply shortages in the real estate market and the development community welcomes the changes as presented by the ministry. However, the supply-demand imbalance is so high that this one change alone will not make housing affordable for the common man. We need certain paradigm changes in the way regulators look at the development of the city, to make prices more affordable. Changes like this will keep the prices in check but we have a long way to go, before prices become truly affordable,” elaborates Harresh Mehta, MD & CEO, Rohan Lifescapes.
 
Like others, Ramesh Nair, MD – West Asia, Jones Lang LaSalle India, also feels that the revamped CRZ norms will bring in significant changes in terms of redevelopment of seafront. “Numerous old structures and unregulated residential developments that have been awaiting this signal in the areas in question will now be redeveloped. Potentially hazardous structures and slums will now give way to tall buildings that comply with modern construction norms,” he points out. However, he is of the opinion that there is a lot of scope for misuse of the newly revised norms. “The government will have to enforce strict vigilance, to ensure that the developers do not capitalise unfairly on them. The proposed redevelopment will, in any case, take time to be transferred from the drawing board into actuality. It could take as long as eight to nine months for actual development activity to begin,” he adds.
 
If the proper guidelines are followed, close to one lakh affordable housing units could result from these revised norms. However, as of now, it is still unclear the magnitude of land that will be liberated for development. “Theoretically, it should amount to about 100 hectares, but there is still no clarity on how much of this will remain as no-development zones under the CRZ-1 classification. Only when there is clarity on this front, can actual development begin. In any case, we do not expect any significant correction in housing prices to result from the process,” explains Nair.
 
While announcing CRZ notification, 2011 and Island Protection Zone (IPZ) notification, 2011, The Minister of State for Environment and Forests (MoE&F) Jairam Ramesh had categorically stated that barring cases of fishermen families, violations of CRZ Notification, 1991, will not be condoned or regularised with CRZ Notification, 2011, coming into force. The ministry had issued directions under the section five of the Environment Protection Act, 1986, to all state/UT coastal zone management authorities to identify all such violations within a period of four months, using latest appropriate maps, satellite imagery and information technology and initiate necessary action, in accordance with the Environment Protection Act, 1986, within a period of four months thereafter. Details of all such violations and action taken will be listed on the website of the CZMA concerned as well of the MoE&F.

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