In the largest real estate transactions post the lockdown, realty developer Sunteck Realty has entered into an agreement to jointly develop around 50-acre sea-facing land parcel in Vasai near Mumbai.
The deal indicates stress-led consolidation in the sector that is expected to gather pace amid the Covid-19 pandemic.
In a bid to push their stalled projects, cash-starved companies and landlords are monetizing their land parcels by forming alliances with developers with strong financial muscle, entering into development management agreements and even looking to sell it on an outright basis.
Sunteck will be developing the entire project in phases over the next 5-7 years and is estimated to have a total development potential of 4.5 million sq ft with revenue of Rs 5,000 crore.
“The project will largely cater to the mid-income segment, especially post the Covid-19 scenario, since it fulfills the emerging customer needs: residential premises that complements today’s luxurious lifestyle and suit the requirements for Work From Home,” said Kamal Khetan, Chairman and Managing Director, of Sunteck Realty.
The listed company will be developing the project along with the landlord through a revenue-share agreement. The landlord who will be responsible for the land parcel and approvals will get 25% revenue. Sunteck will get 75% revenue and will undertake planning, construction, execution, branding and sales & marketing efforts.
The expenditure for construction and execution of the project is estimated to be around Rs 2,000 crore.
The location has good connectivity, upcoming infrastructure developments and all major amenities around it, Khaitan said adding the project will be a key addition to Sunteck’s strong growth drivers including its projects in Signature Island at Bandra-Kurla Complex (BKC), SunteckCity at Oshiwara District Centre (ODC) in Goregaon and SunteckWorld at Naigaon.
“Despite the preceding economic slowdown and the subsequent impact of the Covid-19, Sunteck has kept the pace of development and its promise to the homebuyers to deliver homes. We will continue to reward our investors through acquisition of such value deals,” he said.
According to a recent analysis by ratings agency ICRA, large property developers with established market positions, strong balance sheets and adequate liquidity have weathered the ongoing uncertain business environment caused by Covid19 pandemic better than smaller entities.
Consequently, the already ongoing consolidation in the sector is expected to accelerate further, with larger and more established players gaining increased market share.
