Financial units,banks set to take root on land once exclusive to IT

Five years ago,the government had granted developers of new IT parks in Mumbai double the floor space index (FSI) allowed for other residential or commercial buildings,ostensibly to encourage the growth of the IT industry. Until then,barely 4.5 million sq ft of space was generated for IT parks. With the increase in FSI,there was a sudden spurt of such complexes,the greatest beneficiaries being developers of commercial projects in Central Mumbai’s mill land belt.

Akshaya Kumar,CEO of Parklane property consultants,said the latest dilution effectively allows developers to not use their premises for IT at all. “This is like changing the rules of the games once the game is over,” said Kumar.

By the end of this year,consultants Cushman and Wakefield estimates,another 5.83 million sq ft of new commercial space will be available in Mumbai,all built using the increased FSI available for IT parks. These include projects such as India Bulls Financial Centre and Peninsula’s Business Park in Lower Parel,Ruby Mills Tower in Dadar,Nirlon Knowledge Park and Techniplex in Goregaon,HDIL’s Kaledonia and a project by Akruti City in Andheri,Kanakia Spaces’ Western Egde in Borivli and two projects by K Raheja Group in Malad.

Real estate analysts say the government’s recent policy shift is the latest in a series of changes,none of which have in any way fuelled the growth of the IT industry in Mumbai. At first the extra FSI was allowed only for IT parks developed by government agencies. Later,when a bullish streak hit the commercial market,the benefit was extended to privately developed IT parks.

Pranay Vakil,chairman of Knight Frank (India) says now that the demand for IT is on the wane,those developers who have used up the additional FSI have been given further leeway. He added that other developers who honestly created commercial spaces without the garb of IT parks have been left short-changed.

Kaustuv Roy,executive directive of Cushman and Wakefield,adds even though the IT-park FSI was increased in Mumbai,high rentals have been prohibitive,resulting in most IT companies taking up office space in Navi Mumbai.

“However with so much of commercial supply coming in under the IT park policy,there has been a downward pressure on prices. For instance,rentals at Peninsula Corporate Park in Lower Parel,which used to once lease out space at Rs 400 per sq ft a month,have now come down to Rs 210 per sq ft a month,” he said.