By liberalizing select land use regulations, Mumbai could improve the affordability of housing, increase the size of its metropolitan labor market, and generate economic opportunities for residents. The new “Greater Mumbai Draft Development Plan 2034” proposes to do just that. (Executive Summary, Full Report, Coverage in Hindustan Times and at Vox.com)
A NEW CONCEPT FOR LAND USE REGULATIONS IN MUMBAI
The planning concept behind the new “Greater Mumbai Draft Development Plan 2034” represents an important break from past approaches to design urban regulations in Mumbai. Mumbai’s urban land regulations had been designed to strictly limit development, and indirectly to slow down the urbanization of Mumbai. They were based on an old paradigm that assumed that smaller cities were more efficient than larger ones and therefore that the growth of large cities should be slowed down to allow smaller cities to absorb a larger share of urban migration. This anti-urban paradigm had been abandoned with success many years ago in most cities of the world; Mumbai seemed to have been alone in maintaining restrictive regulations that resulted in prohibitively expensive housing and a growing slum population in spite of increasing households’ real income.
Numerous studies based on a better understanding of the economy of cities, using more accurate and abundant empirical data, have shown that well managed very large cities had a unique role to play as regional economic engines. These large cities’ economies are driven by far higher productivity than those found in smaller cities. It is now recognized that a hierarchy of cities are required in every region, with large metropolises and even megacities having an economic function that cannot be fulfilled by smaller cities. There is no reason for planners to constrain the growth of cities just because of their large size. However, the regulatory framework of very large cities, such as Mumbai, requires much more complex design than those of smaller cities. In particular, urban development regulations have to be adapted to rapid economic growth and to allow quick land use changes that adapt to the global economy.
The new “Greater Mumbai Draft Development Plan 2034” responds to this requirement. The new development plan proposes a set of land use regulations that would allow economic growth rather than restraining it, as it has been the case in the past. The draft development plan and its land development regulations are structured around the current and future metropolitan transport network, which would allow more efficient transport system to grow and in general increase the effective size of the metropolitan labor market, so important for economic development.
HOW WILL THE PLAN IMPACT DENSITIES, HOUSING CONSUMPTION, AND REAL ESTATE PRICES?
The spatial distribution of different maximum Floor Area Ratio (FAR) values is one of the major features of the new development plan. (Floor area ratio is the ratio of a building’s total floor area to the size of the plot on which it is built.) This distribution reflects the likely demand for floor space in different parts of the city.
Contrary to popular misconception, the increase in FAR would not trigger any massive increase in density in Mumbai. The changes in regulatory FAR might increase densities in some areas but this would be compensated by a decrease in density in other areas, as FAR changes have no direct impact on the total number of people living in Mumbai. Only a very large increase in migration and/or the fertility rate would significantly increase population density in Mumbai. I know of no empirical evidence that increasing FAR has ever directly increased urban density.
The increase in allowed FAR should trigger the construction of much more housing in the future, making housing more affordable at least for the middle class. New construction should also be good for the city’s economy. The difference between current FAR and new permitted FAR would stimulate the redevelopment of lots with obsolete buildings. This would create an opportunity for street realignments and more open public space at the street level, as it is easier to require smaller footprints for taller buildings than for shorter ones. The city could design the new street alignments in selected high FAR areas using the same method used for the new development of Ahmedabad’s central business district (CBD).
The new taxes and fees generated by the construction boom induced by the liberalization of FAR values will help finance part of the transport infrastructure that is badly needed independently from the FAR increase.
THE NEED FOR MONITORING AND ADJUSTMENT DURING IMPLEMENTATION
The plan is not perfect, no plan ever is. It is only when confronted with the reality of the real estate market that we will see to what extent the objectives of the plan are met. The FAR level and the way the FAR is granted and priced may need adjustment. It would be therefore very important to monitor—at least every quarter—the number of building permits, the number of dwelling units and the area of office space built, in each location. The prices of housing in new and existing buildings would also have to be monitored.
The monitoring data would then be used to eventually make adjustments to the regulations. The process used to grant FAR values to specific lot and the price that the end user will pay for it would certainly need adjustments. It is by comparing the objective of the plan—allowing floor space to be built where there is the most demand—with the end result that the development regulations proposed by the plan will be tested and improved. The challenge is to price additional FAR in such a way that it generate sufficient resources for the city to finance improvements in its infrastructure, while not making the price of housing and office space unaffordable to the poor and the middle class.
There is no doubt in my mind that the new development plan is a crucial step in turning Mumbai into a world class city in the future.
Cross-posted from the NYU Stern Urbanization Project blog. Tile image courtesy of Vinay Nair.