Mumbai: Old and dilapidated housing colonies in posh South Mumbai and Delhi are making way for luxury high-rises, as developers looking to expand their portfolio within the land-scarce prime areas of the two cities increasingly opt for redevelopment of upscale housing societies to get access to land parcels.
HBS Realtors Ltd, which jointly developed Phoenix Market City malls in Mumbai and Bengaluru along with Phoenix Mills, another real estate firm, is on a massive drive to redevelop around 45 old residential buildings spread across seven acres at Mumbai’s Worli, Hughes Road, Marine Lines and Haji Ali in the next five years. The city-based developer has chosen these four prime locations in the city to mark its entry into the luxury residential business.
Under the redevelopment model, a builder rebuilds an entire building or housing society after getting the required approvals from its residents and regulatory bodies.
In return, the developer gets certain free-sale portion of land which it can use.
Developed under the umbrella brand Ocean Front Living, HBS Realtors is gearing up to formally launch its first housing project at Worli for sale by November this year. Each four-bedroom apartment in the 65-storey building will cost above ₹ 14.5 crore while a five bedroom unit will be priced at around ₹ 38 crore. The project is coming up as part of the redevelopment of Worli’s Shivshahi housing society. In 2010, the company acquired the right to redevelop the society through a joint venture with Infrastructure Leasing and Financial Services Ltd (IL&FS), a construction and finance firm.
“There are many old and unplanned buildings which are 70-100 years old in prime areas of Mumbai and there is a huge demand to redevelop them. So, we felt we should do construction where there is demand. Secondly, if you want to do luxury, you have to be near prime plots which have a beautiful ocean view, but we do not get any open plots here," said Sandeep Shah, managing director of HBS Realtors.
He said the Worli project will incur an investment of over ₹ 1,200 crore, of which it has already received financial closure of ₹ 900 crore through a mix of debt, equity and internal accruals. This year, the company also expects to start construction work on its Haji Ali and Hughes Road projects for which it is currently vacating residents.
Other big developers are also trying their hand in the redevelopment space.
Godrej Properties Ltd has undertaken three redevelopment projects in Mumbai’s Chembur and Byculla areas. While Godrej Sky, a luxury residential building with over 154 apartments has been launched for sale, two other projects Godrej Prime and Central are currently under construction.
Tata Housing Development Company Ltd is also scouting for redevelopment opportunities in a few of the old housing colonies in west Delhi in addition to its ongoing projects in Mumbai. The company is already redeveloping a few housing colonies owned by the Maharashtra Housing and Area Development Authority (MHADA), a government body.
A spokesperson of the Tata group firm said that despite the challenges, redevelopment of old houses is the only way to expand within prime locations of a city.
“We are looking for opportunities for redevelopment in Delhi though we are yet to finalise anything. If a developer wants to expand in the proper city area, one has to look for redevelopment of old housing colonies as there is no other land." the Tata spokesperson said. In South Delhi, three government colonies in Netaji Nagar, Kasturba Nagar and Thyagraj Nagar, spread across 185 acres, got the urban development ministry’s go-ahead in 2014 to be redeveloped. The National Building Construction Co. Ltd (NBCC), a public sector firm, has undertaken the projects in which the two-storeyed houses will be converted into 12-storeyed buildings.
Mohit Malhotra, executive director at Godrej Properties, said the company is actively looking for opportunities in the redevelopment space and has signed up with a few private housing societies in Mumbai to reconstruct them.
“There are multiple opportunities which we are evaluating. Because of the changes in the development plan of Mumbai, the entire project was stuck for a while. Once there is clarity, we can move forward on some of those projects. But we are actively evaluating some of the opportunities in the redevelopment space," Malhotra said.
Despite the opportunities it brings, redevelopment of old societies comes with its own set of problems. Often disagreement among residents over compensation or the choice of developers results in long delays in getting approvals; in addition, the process of vacating current residents and rehabilitating them is tedious.
“Redevelopment is a long-drawn process. Lots of dynamics are involved in it. There are regulatory processes which need to be followed and there are multiple stakeholders which are taking decisions. Having said that, micromarkets of Mumbai and Delhi offer a lot of scope for redevelopment," said Samantak Das, head of research at Knight Frank India, a property consultant.