Hyderabad: Over 15 lakh sq yards, equivalent to 316 acres, of Transferable Development Rights (TDRs) worth 2,000 crore is available with the Greater Hyderabad Municipal Corporation (
GHMC).
The available TDR can suffice for Greater Hyderabad's built-up demand in the next two to three years, builders and developers say. With the govt planning to issue TDRs to property owners while taking over their land for the Musi rejuvenation project, flyovers, road widenings and lake development, a few lakh sq feet of TDR is expected to be added in the city.
The municipal administration issued TDRs of 51.83 lakh sq yards, equivalent to 1,070 acres, to property owners after acquiring their land or property for master plan road widening, infra projects and other public purposes since 2017. Of the total TDRs issued to 1,585 property owners, only 34.49 lakh sq yards were utilised.
Until now, with the availability of TDRs exceeding demand in the market and with no takers, owners cried foul as they were forced to sell their TDRs at lower prices if they needed money. In response, the state govt issued a GO recently making TDR utilisation mandatory for construction of high-rises above 10 floors, where 10% of their built-up area should be through TDR utilisation.
"TDRs are not mandatory now, only optional. Land or property owners can opt for cash compensation for their land instead of TDRs. But the state govt is not in a position to pay cash compensation to the owners, given the present projects being taken up by the GHMC, HMDA, Musi Riverfront Development Corporation and other agencies. The state govt may have to pay about 5,000 crore in the next two years if property owners opt for cash compensation. To encourage owners to take TDRs, the govt came up with the mandatory 10% TDR for buildings of 10 floors and above," a senior municipal administration official said.
However, some builders and developers are worried over the new rule (mandatory 10% TDR for high-rises), saying it would lead to an escalation in project construction costs for those who go for high-rises. Their estimation is about 300 to 400 per sq feet. "Earlier, TDRs were available for 23% to 25% of their value, and now around 55% of the value. If the TDR value is 10,000 per sq feet, we used to get it for 2,500 per sq feet, and now, after the TDR amendment GO was issued, the rates increased to 5,500 per sq feet," V Rajasekhar Reddy, ex-President of Credai, Hyderabad, told STOI.
Municipal administration officials, however, claimed that the govt brought the amendment to the TDR rules only to benefit TDR holders, owners and to encourage others. "In Bangalore, the Floor Space Index (FSI) is limited to 2.5, and an additional 0.5 FSI is allowed if builders utilise TDRs. In Telangana, since there is no FSI limit, TDR is mandated only for big builders, for buildings above 10 floors. In the past couple of years, only 60 permissions were given by the GHMC and HMDA for 10 floors and above," another GHMC official said.
What is TDR?
Transferable Development Rights (TDR) is a certficate issued by urban local bodies (ULBs) or Municipal Corporations, giving an additional built-up area to the owners of a plot or a builder whose land is taken over for a public purpose, in lieu of surrendering their land free of cost. They do not get any cash compensation. The property owner can utilise the built-up area themselves or can sell it to others (either per sq feet or sq yards, depending on the prevailing rate in the market in that area), who can utilise it for constructing additional floors or built-up space in their buildings or projects.
The purchaser or the owner can utilise the TDR for two additional floors over the normal. For instance, three floors are permitted as per the building rules on a plot. If the owner or purchaser utilises the TDRs, they can raise two additional floors legally without insisting on more setbacks and without any road width.
The state govt, which brought the TDR policy in 2017, stopped payment of cash compensation in 90% of cases, as cash payment is a huge financial burden on the govt and the civic body. Land costs are skyrocketing in GHMC areas, with road widenings, construction of new flyovers and skyways being taken up. Now, the govt is also planning to release TDRs to beautify lakes and take over private lands in FTL and buffer zones.
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