Broken real estate policy: Twin towers' demolition should not be the end

The demolition of the Supertech Twin Towers in Noida, following an adverse court judgment, brings to an inglorious close a saga that has lasted almost two decades. The company had been ordered a year ago to demolish the building on the grounds that it violated a “minimum distance requirement”, following local middle-class residents complaining that the 40-storey towers blocked out sunlight and fresh air. The company has had to take a major hit on its balance sheet; although the height of the towers was raised several times following orders from the Noida development agency, the agency itself, alongside the officials concerned, seems to have escaped scot-free. Reportedly, 652 of the 711 people who have bought homes in the complex have come to a settlement with Supertech, with the case of the others being examined by the Supreme Court. Some observers might reasonably ask why the Supreme Court might be so closely engaged with a property dispute. Yet there are major questions raised in this case about the administrative culture of India and how it relates to its rapid urbanisation.

India is a capital-starved country, and the destruction of invested capital — as opposed to its expropriation — should be done only as a last resort. Better ways than demolition need to be found to deal with such issues in the future, for example, monetary compensation to those who won the case. And that such issues will recur is a certainty. The patchwork of regulations, zoning laws, and permissions that govern urban expansion in India are such that much construction in the country runs the risk of illegality. Town planning in India is stuck in past decades, and is not fit for rapid expansion. Under such circumstances, broader permissions for building and rezoning must become the default choice of politicians. In the current system, restrictive rules are held in place even in cities like Mumbai. This allows politicians and bureaucrats to use additional building permissions — for example, discretionary grants of the floor space index or FSI — to serve their own end. Sometimes these can be the source of corruption. Other times they can be used for electoral purposes. Just ahead of the Brihanmumbai Municipal Corporation polls in Mumbai, for example, the Maharashtra government has announced that more FSI will be allotted to those building rental accommodation for policepersons.
 

Indian cities are bursting at the seams and the government has a stated policy of building more affordable housing in the years to come. If this is to come to fruition, the dysfunctional relationship between homebuyers, developers, officials, and the courts revealed by the twin towers case must come to an end. Policymakers should look outwards to countries and regions that have found successful models that expand urban clusters while protecting the rights of homebuyers and ensuring a profitable construction sector. In some places, homeowner rights — such as the amount of access to the sky, for example — have been successfully commodified, internalising and rendering tradable what is otherwise an externality. In others, exclusive zoning has been phased out and more liberal mixed-usage zones have become the default, leading to greater wealth creation all round and more liveable cities. In India, no such solutions have been tried. The demolition of the Noida towers shows how overdue they are.