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Stalled realty projects being outsourced
The New Indian Express  |  April 17, 2019

Anuradha Shukla Express News Service

Struggling to complete delayed projects, and under increasing pressure from the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA), Noida-based Logix group has hired ATS Group to complete over 4,500 of its flats in Noida and Greater Noida.

 

ATS Group will complete Logix’s three projects — Logix Blossom Greens, Logix Blossom County and Logix Blossom Zest — in the Noida region for an undisclosed amount, which is expected to help home-buyers get possession of their apartments by the end of this year.

 

The Logix-ATS deal is part of a growing trend in the industry where many developers are trying to kick-start work on stalled projects worth thousands of crores by striking similar deals. Sources say many have begun outsourcing stalled projects to other infrastructure firms, either through profit-sharing arrange-ments or for a fixed fee.

 

Such deals are win-win propositions, say analysts. For example, Logix group, by this arrangement, will escape the penalty set to be imposed by regulators for delays and the ATS group, which has just recently announced its foray into project management consultancy (PMC), will get a large order. With the number of stressed and stalled projects shooting up over the last 2-3 years, experts see the market for outsourcing rising in tandem.

 

According to ANAROCK Property Consultants, the top seven property markets in the country have a total stock of 5.6 lakh delayed housing units worth a whopping Rs 4,51,750 crore.

 

Most of these units were launched either in 2013 or before. Those with the wherewithal to take up and finish such projects see immense opportunity in the segment.

 

“There are so many requests for completing delayed projects that it is enough to fill our order books. However, we are diligent in ing such projects,” a senior official from state-run construction major NBCC told this publication.

 

NBCC has already taken up a few projects of the crisis-hit Amrapali Group, after a direction from the Supreme Court. It has also bid for the bankrupt Jaypee Infratech, which is currently undergoing insolvency proceedings, and if they win they could end up resuming work on 24,000 of Jaypee’s stalled apartments.

 

Meanwhile, ATS Group says it “will endeavour to take up incomplete projects, where with proper management and construction, due diligence execution will be made ensuring delivery as per stipulated timelines”. According to sources, the company has already received interest from many companies with incomplete projects on their books and negotiations are on for other similar deals.

 

Logix, meanwhile, has also tied up with realty firm Tribeca to develop a mixed-use project in Noida at an investment of Rs 250 crore. The project, located adjacent to Logix City Centre mall, will have a total developable area of 5 lakh square feet, including 2 lakh square feet each for retail and office space.

 

The remaining one lakh square feet in the project will be dedicated to building serviced apartments.

 

The Tribeca group, which had brought Trump Towers to India, also says it will rope in financial partners to fund the above project. Currently, Tribeca is developing five projects with a total value of Rs 6,500 crore across Mumbai, NCR and Kolkata, and is developing two Trump Tower projects in Kolkata and Gurugram.

 

Opportunity in delays

 

  • According to ANAROCK Property Consultants, the top seven property markets in India have a total stock of 5.6 lakh delayed housing units worth a whopping Rs 4,51,750 crore.
  • The Logix-ATS deal is part of a growing trend where developers are trying to kick-start work on stalled projects by contracting them out to other infra firms.
  • Experts say that companies with the wherewithal to take up and finish such projects see immense opportunity in the segment.