Mumbai's redevelopment boom: How land scarcity is shaping the city's future

Mumbai is among the largest residential markets in the country. However, the island city is also among the most scarce when it comes to fresh land availability. No wonder, then, redevelopment of existing housing societies is gaining big traction in the financial capital and is attracting big developers from across the country in this market. 

Over the past few decades, the Mumbai Metropolitan Region has grown leaps and bounds, now stretching over 6,328 square kilometers. However, the area under the Brihanmumbai Municipal Corporation (BMC) is just over 437 square kilometers. As the city is growing, businesses are expanding and with more people entering the city, redeveloping old buildings becomes inevitable. 

Between 2020 and May 2025, 910 housing societies signed development agreements, unlocking nearly 326.8 acres of potential land area, based on FSI utilisation norms and average unit sizes across the region, according to a new report by real estate consultants Knight Frank. Worth noting here is that this data is specific to the redevelopment of housing societies in the BMC area and doesn’t include slum rehabilitation projects. 

The Western suburbs of Mumbai have dominated the redevelopment space and account for 633 of the 910 society deals, recording 70 per cent of all agreements signed between 2020 and May 2025.

With hardly any open land parcels available, Knight Frank expects current society redevelopment projects will add 44,277 new homes at a value of Rs 1.30 lakh crore by 2030. It is estimated that there are around 160,000 societies that are over 30 years old and eligible for redevelopment.

“Society redevelopment in Mumbai is both inevitable and essential, given the city’s limited avenues of greenfield growth and the constant rise in demand. Redevelopment has significantly reshaped the dynamics of several micro-markets and remains a critical driver of Mumbai’s urban renewal,” said Shishir Baijal, chairman and MD of Knight Frank India. 

In the years post-COVID, housing demand surged across India as people who were living in rented houses sought their own homes or those who had properties looked to move into bigger ones. In recent quarters, however, some signs of slowdown in demand have emerged in major cities, as prices were rising and interest rates remained high through 2024. 

Mumbai is not showing any major slowdown signs just yet, said Gulam Zia, senior executive director – research, advisory, infrastructure and valuation at Kight Frank India. 

Between January-August 2025, Mumbai saw 99,869 property registrations, up around 3 per cent year-on-year. The strong demand and the growth potential have attracted several large developers to Mumbai’s society redevelopment market. 

The Prestige Group, for instance, has a luxury redevelopment project in the tony neighbourhood of Bandra. Earlier this month, Bengaluru-based Puravankara acquired redevelopment rights for a prime residential society in the upscale Malabar Hill area in South Mumbai. Luxury developer Oberoi Realty is redeveloping a large housing society in Worli, also in south Mumbai.

For long, much of the redevelopment has been concentrated in compact societies, with over 80 per cent agreements since 2020 for plots below 0.49 acres. However, deal sizes are slowly increasing, signalling the emergence of large society cluster development opportunities. 

“About 30 years back, you had the majority of the housing stock coming from greenfield. But, as the city exhausted its land stock, old industries and factories started making way for housing projects and that was followed by slum rehabilitation projects. Then came society redevelopment. While it's not new, it's exploding now,” said Zia.

The data shows there were 67 deals in 2023, which surged to 196 in 2024 and between January and May 2025, there have been 115 deals. 

The Development Control and Promotion Regulations 2034 provided key enablers for society redevelopment projects. Cluster and composite redevelopments, for instance, get higher buildability through amalgamation and relaxed design norms, noted Knight Frank. Similarly, it enabled redevelopment of standalone societies, extremely relevant in suburban areas, with FSI adjusted based on road width and land parcel conditions. 

Is it a viable long-term option?

The process of redeveloping societies is typically long-drawn, with projects typically spanning anywhere between 8-11 years from the initial initiation by residents to the final handover of homes by the project developer. Societies that planned their redevelopment more than 5-6 years ago are only entering construction or early delivery phases now. 

As prices were rising, feasibility in the redevelopment market also improved and that has led to a surge in such projects, with older societies keen to go in for redevelopment and developers trying to outdo rivals by making commitments to the societies well beyond sustainable limits. So much so that experts warn that a point of inflection may not be far away. Particularly if the bull run in the housing market fades, some of this redevelopment demand may also cool and some of the projects, especially where there has been over-commitment, may languish. 

“With overheated market conditions and sharply rising prices, we are at a stage where excessive demands and aggressive offers threaten long-term viability,” said Zia.

According to his assessment, developers should typically not share more than 30-35 per cent of the total area with the society in markets where the price is under Rs 40,000 per square feet. That may increase to around 40 per cent where prices range between Rs 40,000-60,000 square feet and up to 50 per cent in locations priced upwards of Rs 75,000 per square feet. 

“Beyond these thresholds, cash flows lose flexibility and projects become vulnerable,” said Zia. 

It may therefore be prudent for participants to stay disciplined now so that projects remain resilient if and when there is a slowdown.