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L&T Realty plans alliance with DB Realty for Malad Housing Project
The Economic Times  |  February 25, 2020

Kailash Babar ET Bureau

L&T Realty, Larson & Toubro’s real estate development arm, is in advanced talks to form an alliance with DB Realty to jointly develop an over 1.4 million sq ft residential project in Mumbai’s western suburb Malad, said three persons with direct knowledge of the development.


The project will be developed on DB Realty’s nearly 8-acre land parcel in Dindoshi locality of Malad.


As per the agreement terms, L&T Realty and DB Realty will share space developed in 60:40 ratio. DB Realty, as the landlord, will be responsible for land related approvals and bear the cost to be incurred for fungible floor space index (FSI) and transferable development rights (TDR), while L&T Realty will construct, execute, brand and market the project.


“Talks are at an advanced stage and the deal is expected to be finalised anytime soon. The entire plot is around 20 acres, but the alliance is being formed for development of part of it,” said one of the persons mentioned above.


ET’s email query to L&T Realty did not elicit any response until the time of going to press. DB Realty spokesperson said the company is not holding such talks.


In the recent past, DB Realty has entered into several such alliances with developers to jointly develop its prime land parcels in localities like Prabhadevi and Bandra in Mumbai.


In one such instance, Bengaluru-based Prestige Group has picked up 26% stake in a commercial development of DB Realty in Mumbai’s Bandra locality. This project has development potential of over 7 lakh sq ft and is valued around Rs 2,100 crore. The joint venture entity is planning to develop a mixed-use project with total 200 hotel rooms, while the remaining will be office space. The deal marked Bangalore-based Prestige Estates Projects’ entry into the Mumbai commercial market.


The government’s policy interventions, including the implementation of Real Estate (Regulation & Development) Act, 2016, the Goods & Services Tax India and demonetisation have resulted in consolidation in real estate sector. Several developers across markets are looking for partners to associate with through joint developments, joint ventures and even exiting a few projects completely.


Earlier, developers preferred to invest in the creation of a land bank and sought low-cost land parcels in upcoming areas for later development. With the evolving operational environment under the RERA and GST regimes, developers have been relooking at their business models.


In the back of exorbitant land prices, several realty developers are keen to get into joint development agreements, joint ventures and development management agreements in most property markets including Mumbai, National Capital Region, Pune and Bengaluru. Under joint development agreements, the developer enters into a pact with the landlord to jointly develop land parcels in exchange for an upfront payment, or a share in revenue of the constructed space in the completed project making it a win-win situation for both.