Bangalore: Peninsula Land Ltd, the realty arm of the Ashok Piramal Group, has invested Rs115 crore to acquire a plot for redevelopment on Mumbai’s posh Napeansea Road.
The firm is now in the last leg of acquiring land ownership rights and negotiating with tenants for the redevelopment, a mandatory process.
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An analyst at brokerage Prabhudas Lilladher Pvt. Ltd said that at Rs38,000 per sq. ft, the Napeansea land, where Peninsula plans to build high-end residences, “is expensive in the current market conditions because the land cost alone is very high”.
The project, Peninsula’s first redevelopment deal, is estimated to generate around 30,000 sq. ft of saleable area.
In a 27 April report, Prabhudas Lilladher said Peninsula Land, barring one project in Goa that is to be launched in 2010-11, has a weak incremental launch schedule for the period.
But it also said the firm has around?Rs640?crore?of cash, which it would use to get new projects, mainly in Mumbai.
Rajeev Piramal, executive vice-chairman of Peninsula Land, didn’t respond to emails sent on Wednesday.
Property consultants say current land rates in the Napeansea Road area in south Mumbai are in the range of Rs35,000-55,000 per sq. ft.
While the mid-segment residential market in Mumbai, typically priced at Rs40-60 lakh an apartment, saw substantial demand the past year, the luxury market is making a comeback now. Developers such as Indiabulls Real Estate Ltd, Orbit Corp. Ltd and RKW Developers Pvt. Ltd have successfully launched high-end projects in recent months.
As for the Napeansea Road project, Peninsula is in talks for a joint venture with Orbit Corp. so their adjoining plots can be developed together.
“We have already acquired a plot for Rs75 crore and since both the plots are relatively small in size, it made sense that we amalgamate them and then jointly develop,” said a senior Orbit official, who can’t be named because an agreement has not yet been signed.
Graphic by Yogesh Kumar/Mint