Prestige Estates Projects has entered into an agreement to execute an over 1 million sq ft housing society redevelopment project with nearly Rs 6,000 crore revenue potential in Mumbai’s plush Worli locality.
The Shivshahi society redevelopment project involves 192 tenements spread over 3.3 acres opposite the GlaxoSmithKline Pharmaceuticals property on Dr Annie Besant Road in central Mumbai.
The redevelopment project has been stuck for more than a decade as the earlier developers could not execute the project due to several reasons including disagreements with the society members.
Prestige Estates has repaid a loan worth Rs 170 crore raised by the earlier developer against the development potential of the housing society and will also be making an investment of over Rs 578 crore towards construction cost, compensation to society members and premium towards availing fungible floor space index (FSI).
“The overall development potential of the project in Worli will be 1 million sq ft carpet area. After factoring the rehabilitation portion, we will be able to have a free-sale component of around 7.5 lakh sq ft,” Venkat K Narayan, CEO, Prestige Group, told.
According to him, the company is planning to develop a premium residential project here and the development is estimated to fetch revenue of around Rs 6,000 crore given the ongoing property rates in the vicinity.
The company has entered into this redevelopment agreement with The Worli Shivshahi Co-Operative Housing Society through its subsidiary Prestige Falcon Mumbai Realty. The company has paid stamp duty of nearly Rs 29.12 crore for the agreement’s recent registration, showed the documents accessed through CRE Matrix.
Prestige Estates Projects is planning to develop a premium residential development on the plot and expects to complete the same in the next four years after commencement. It is planning to launch the project by September as it is currently under planning and approval process.
Prior to this new development agreement, the society had inked a pact with realty developer Wondervalue Realty Developers. Following this pact, the erstwhile developer had raised a loan facility from a consortium of banks including State Bank of India, Union Bank of India, Central Bank of India and Allahabad Bank that is now merged with Indian Bank.
Some of the members of this consortium had initiated enforcement proceedings in the Debt Recovery Tribunal for recovery of the loan. The consortium has granted its no-objection for the one-time settlement and discharge of the loan and withdrawal of recovery proceedings basis conditions agreed with the new developer.
The land parcel that houses the buildings constructed in 1950s was leased by the Municipal Corporation of Greater Mumbai (MCGM) to the Maharashtra Housing and Area Development Authority (MHADA) for 999 years. The plot was then leased to develop housing for economically weaker sections (EWS) of industrial workers.
Apart from the residential buildings, the land parcel adjoining the same also had around eight huts spread over nearly 2,100 sq ft and society offices. Of these, seven have been vacated and demolished by the earlier developer.
Real estate projects involving redevelopment and rehabilitation are the mainstay of Mumbai’s property market as the land-starved city has few vacant land parcels. At present, around 19,000 properties in the city are awaiting redevelopment and this would be a big business opportunity for developers with established brand and execution track record.