Godrej Properties, the real estate arm of the Godrej group, is set to foray into redevelopment space in Mumbai, and is learnt to be close to finalising a Rs 3,000-cr project in the north western suburb of Mumbai.
Godrej Properties is also in talks with private equity players for stake sale in the redevelopment project, a source said. The company will maintain a majority stake in the project but offload up to 49% stake.
Redevelopment involves demolishing existing buildings and constructing new ones -usually taller - on the same site. As the new floor space index or FSI (ratio of height of the building to the available area) has increased, taller buildings can be constructed in the same space. Under redevelopment, the existing residents of the building get bigger residences, and the builder makes profit by selling the additional apartments at the current market rate.
According to industry sources the company is also negotiating at least three more projects in south Mumbai and an eastern suburb. The south Mumbai projects are measured anywhere around 30,000 to 40,000 sq ft of developable area and valued anywhere around R50,000 per sq ft. The total project cost is about R200 crore.
The western redevelopment project will be around 3 million sq ft of developable area. The company is in final negotiating stage for the project and the deal could be finalised before December, a person close to the development said.
"The company is looking in to redevelopment space in Mumbai and the projects would be carried out through a fully-owned SPV of Godrej Properties. At this time we would not like to disclose any detail about the projects," said Milind Korde, managing director, Godrej Properties.
Godrej Projects Development, a fully-owned special purpose vehicle (SPV) is set up for redevelopment projects.
The company along with most developers, especially those present in Mumbai and National Capital Region (NCR), has been facing pressure on sales volume.
The redevelopment space in Mumbai offers a huge opportunity for developers with at least 16,000 buildings to go for redevelopment in Mumbai in next decade.