Hyderabad: Real estate developers in Hyderabad have opposed the new Transferable Development Rights rules, warning that the policy could push up Hyderabad apartment prices by Rs 350 to Rs 400 per square foot. Builders have urged the State government to reconsider the order.
The Metropolitan Area and Urban Development Department issued Government Order Ms No.16 on January 16 this year. The order mandates that builders constructing high rise buildings above ten floors must utilise TDR for 10 percent of the built up area above the tenth floor.
Developers say the rule will increase construction costs significantly. They warn that the additional expense will eventually be passed on to homebuyers through higher apartment prices.
A member of CREDAI Hyderabad said the mandatory utilisation of TDR will add a financial burden to ongoing and future housing projects. As a result, the cost of residential units in Hyderabad may increase sharply.
Impact Of New TDR Rules On Hyderabad Apartment Prices
Builders explained that most development projects operate under land sharing agreements with property owners. These agreements usually follow 60 to 40 or 50 to 50 ratios depending on the land parcel and location. In such arrangements, developers must also purchase TDR certificates, which adds to the project cost.
According to industry representatives, the financial impact becomes larger in tall structures. For example, if a developer constructs a forty floor building, the builder may have to invest nearly four times the cost to purchase TDR for the mandatory portion.
They estimate that this could increase Hyderabad apartment prices by around Rs 350 to Rs 400 per square foot. Developers say this will affect housing affordability in the city.
Currently, TDR certificates are available at minus 23 to 25 percent of the total cost value. Builders believe the new rule may sharply increase demand for TDR. This could also create the possibility of black marketing in the TDR market.
Developers have suggested a modification to the rule. They propose that the mandatory TDR utilisation should apply only to projects above twenty floors instead of ten floors.
Industry representatives also said the rule should not be applied uniformly across all zones. They argue that imposing the same condition across western and other areas of the city could discourage high rise development in several parts of Hyderabad.
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