Godrej eyes small realtor JVs
Rising borrowing costs and a slowdown in sales is forcing small realtors to look at bail-outs through joint development with larger groups - an opportunity that Godrej Properties hopes to cash in on. Sachin Dave and Tejeesh N S Behl report.business Updated: Oct 11, 2011 21:11 IST
Rising borrowing costs and a slowdown in sales is forcing small realtors to look at bail-outs through joint development with larger groups - an opportunity that Godrej Properties hopes to cash in on.
Godrej Properties, the real estate arm of the Godrej Group, is jointly developing a 2.5-acre land parcel in Bandra Kurla Complex in Mumbai with Jet Airways and is also looking at similar deals, said Adi Godrej, chairman, Godrej Group.
According to the industry trackers, some real estate developers in Mumbai who were faced with credit crunch had approached cash rich developers such as Godrej to buy them out.
"There are certain deals we are discussing and we could be going ahead with joint development," Godrej told HT.
In the joint-development agreement, Godrej Properties takes a percentage in the total profit while the rest is passed on to the group company. Godrej Properties would add 8% of the total profit to its bottom line said Godrej.
Godrej Properties is also developing excess land within the group, held by other group companies with land parcels typically measuring 100 acres or more.
As part of this, it will develop a residential township on one of the biggest land parcels - a 120-acre plot - in Bangalore belonging to Godrej Agrovet.
"We have already announced a joint-venture development on a 35 acre plot a year ago. We are planning to have similar joint ventures with other Godrej group companies and we are waiting for permissions," said Godrej. "There are many land parcels in Mumbai, Hyderabad and Bangalore measuring 5-acres, 10 acres and one of 120-acres," he said.
Many conglomerates, especially the old business houses that have huge excess land surrounding their factories and offices, are now developing this excess land.