Prestige Estates Projects’ subsidiary Prestige Projects has acquired a prime sea-facing land parcel near Marine Lines and Charni Road in south Mumbai from DB Realty’s subsidiary Marine Drive Hospitality & Realty for over Rs 704 crore. The deal values the plot at over Rs 306 crore per acre, pushing it higher in the tally of most expensive land transactions anywhere in the country.
DB Realty had initially planned to develop a 125-storey luxury hotel on the plot. The plan was later modified in favour of a luxury residential project with two towers, which remained a non-starter.
Prior to this, Edelweiss Asset Reconstruction Company had attempted to auction the said land parcel to recover Rs 473 crore of a loan and interest. Edelweiss ARC had taken over the plot owned by DB Realty’s subsidiary Marine Drive Hospitality last year after it failed to repay a Rs 439 crore loan.
Edelweiss ARC had taken possession of the plot after the developer had defaulted on a loan provided by IFCI and Central Bank of India.
Following this transaction, DB Realty has utilised the money paid by Prestige Projects to repay the lenders.
The buyer has also taken over certain loan obligations of DB Realty and thus all the lenders have released and reconveyed the security interest created in the said property. Hence, there is no subsisting charge, mortgage, or security interest on the said property, showed the agreement accessed through CRE Matrix.
DB Realty had acquired the land as part of a redevelopment project from a local real estate developer in 2005. The proposed hotel project was abandoned after it got entangled in issues related to approvals for a higher floor space index, which is the ratio of development permitted on a plot.
According to reports, the plot was being jointly developed by DB Realty and Pune-based Panchshil Realty but work on two high-end luxury towers planned later got stuck early last year over non-payment of loans.
The Prestige Group is planning to develop two luxury residential towers on this plot overlooking the Queen’s necklace and the Arabian sea. With this, the group will further expand its presence in Mumbai’s luxury space, said Tariq Ahmed, CEO, West India, Prestige Group.
Prior to this, Prestige Estates Projects had made two strategic acquisitions to attain complete ownership of two of DB Realty’s key projects in central Mumbai’s Bandra-Kurla Complex (BKC) and south Mumbai’s Mahalaxmi locality by picking up balance stake for a total consideration of over Rs 1,176 crore.
The BKC project has a potential gross leasable area of 2.79 million sq ft Grade A office space, while the project in Mahalaxmi has potential gross leasable area of 2.9 million sq ft of Grade A office space.
Both the projects, in BKC and Mahalaxmi, are currently under construction and are expected to be completed within the next 3-4 years.
Industry experts believe the ongoing market consolidation in favour of large and established developers will gain further momentum owing to their better execution ability and access to liquidity.
Transactions for land parcels have started to gather pace again with many deals including outright acquisitions and joint ventures in key property markets of Mumbai, Pune, Chennai, Hyderabad and Bengaluru either being closed or expected to close soon.