Mumbai's Pagdi Buildings: A Fresh Policy Push for Redevelopment

The Maharashtra government’s move to signal a fresh regulatory framework for the redevelopment of pagdi system buildings could unlock one of Mumbai’s most frozen housing segments, potentially opening up redevelopment possibilities in some of the city’s most land-starved and centrally located neighbourhoods.

The country’s financial capital has over 19,000 pagdi buildings, with more than 13,000 still pending redevelopment, many in prime central areas where land is scarce. The move is expected to generate renewed investor interest and potential development opportunities across these high-value precincts.

The pagdi system allows tenants to occupy properties at low rents after paying a one-time premium, with strong tenancy rights.

“A clearer policy framework for pagdi redevelopment is long overdue and could make many stalled projects viable,” said Parag Munot, MD, Kalpataru Ltd. “If the rules address consent thresholds, rehabilitation clarity and financial feasibility, it will unlock redevelopment in prime, land-starved locations. This can improve safety and living conditions while enabling fresh residential and commercial development in Mumbai’s core areas, where opportunities are extremely limited.”

For decades, redevelopment of pagadi buildings, largely concentrated in south and central Mumbai, has remained stuck due to complex ownership structures, rent control provisions and prolonged disputes between landlords and tenants.

Deputy chief minister Eknath Shinde last week told the state legislature that the government is planning a separate framework to ease legal and financial hurdles in the redevelopment of pagadi buildings.

“Many pagadi buildings are over 60-80 years old, with structural audits repeatedly flagging safety concerns,” said Sanjay Daga, CEO and managing director of Anex Advisory. “Yet redevelopment has remained elusive due to lack of clarity on consent norms, rehabilitation benefits and returns for property owners. A clearer policy framework could align incentives and bring these projects back into consideration. Initial estimates point to redevelopment adding sizeable housing and commercial space in the city’s core precincts.”

From a market perspective, the impact could be most visible in older precincts such as Girgaon, Kalbadevi, Grant Road, Tardeo, Byculla, and parts of Dadar, Parel, Matunga, and Sion, where pagadi buildings dominate the urban fabric. Redevelopment in these locations could add new housing supply in areas that otherwise offer little scope for greenfield development, while also improving living conditions for existing occupants.

However, much will depend on the final shape of the rules. Experts point out that unless the framework adequately addresses financial viability, through incentives such as additional development potential or transferable development rights, projects may continue to struggle. Tenant groups, on the other hand, are expected to closely scrutinise provisions related to rehabilitation area, ownership rights, and safeguards against displacement.

Industry experts also caution that implementation will be key. Around 28,000 tenant-landlord disputes linked to pagadi properties are currently pending in various courts, and any new framework will need a clear mechanism to deal with these legacy cases if redevelopment is to gain momentum.

For now, the government’s announcement marks a shift in tone from decades of policy inertia around the pagdi system. If translated into workable rules, the move could play a meaningful role in renewing Mumbai’s oldest housing stock, an outcome the city has long waited for.