Ernst and Young on TDR , Mihan < Nagpur
The project affected people (PAP) of Multimodal International Hub Airport at Nagpur (MIHAN) would not get much monetary benefit from selling of Transferable Development Right (TDR) as claimed by the Maharashtra Airport Development Company (MADC) and supporters of MIHAN. The PAP will get maximum price of Rs 250 per sq ft by selling TDR in Nagpur city. And outside Nagpur, there is no demand for TDR.
Renowned consulting firm M/s Ernst and Young in its concept paper on TDR for MIHAN notified area plainly stated that there will be excess supply of TDR as against demand in Nagpur. The company stated that in the year 2014, the total demand of TDR in the city will be 53 million sq ft while the supply will be 61 million sq ft. Even this demand figures have been calculated on the basis of ideal situation and moderate realty boom. These figures stated that TDR would not be beneficial for the project affected farmers and people of the MIHAN, as sought to be claimed by those portraying TDR as panacea for MIHAN PAPs .
It may be mentioned that MIHAN supporters have worked out formula for PAP that Maharashtra Government will allow TDR in place of compensation so that they can get more money in lieu of paltry compensation for lands acquired for the ambitious project. In its report it was mentioned that Nagpur Municipal Corporation (NMC) has divided city into three TDR zones. The total TDR issued in Nagpur Market is around 34,881 sq mt out of which 14,800 sq mt have been utilised in Zone B mostly in the areas lying between Amravati road, the inner ring road and Wardha road. The city is still having 20,000 sq mt (roughly 2 lakh sq ft) unutilised TDR easily available in the real estate market. If in the current market situation 20,000 sq mt TDR is unutilised than what will be the position when market will be flooded with TDR generated from MIHAN ?. experts asked. In the past three years, the prices of TDR have gone up from Rs 150 per sq ft to Rs 2,000 per sq ft. Some TDR transactions in third quarter of 2008, have even fetched between Rs 3,000 to 3,500 per sq. ft. The transacted value for agricultural land acquisition had varied in the range of Rs 60 to 70 per sq ft. This low price was prevalent due to bulk land acquisition. The consultants have pegged the feasible price for the sale of TDR at less than Rs 250 per sq ft (assuming a FSI of 1).
The company in its concept paper stated that Nagpur market sees a negligible supply of non-IT office space of approximately one lakh sq ft in 2009. It is estimated that there is likely to be a demand of about 1.63 million sq ft by 2011 in this category. This indicates that there could be demand of TDR in non-IT office segment. The other category that could witness a market for TDR is retail segment where a demand supply gap of approximately 4.29 million sq ft can be seen by the year 2011. Company while analysing present market situation, stated that global slowdown indicates that Nagpur market is pre-mature, when it comes to the utilisation of TDR originating from MIHAN. The company suggested a need for consolidated planning of infrastructure in the TDR receiving zones. Policy interventions will be required to facilitate inter-jurisdictional transfers of TDR, the TDR programmes may require a dedicated body to administer the programme and involves additional cost for implementation, an appropriate phasing mechanism is needed to be worked out to avoid an over supply situation in the market, the report claimed.
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