Piramal Group’s real estate arm Piramal Realty has agreed to develop a commercial office project of Omkar Realtors and Developers in suburban Mumbai, even as the two companies are in talks to jointly develop more such projects in the city.
The companies agreed to jointly develop a 2 million-sq. ft, office complex at Mumbai’s Andheri area, two people aware of the matter said on condition of anonymity.
This is the second time Piramal Realty has tied up with Omkar, after entering into a development agreement for a 12-acre project in south Mumbai, last year.
Joint development agreements have been a lifeline for mid-sized developers that are unable to complete projects on their own because of a liquidity crunch, owing to a prolonged slowdown in the sector. Such pacts with larger realty firms allow them to monetize their land holdings and pare debt.
“Omkar has always been known for residential development. So, it’s about bringing the right partner, as they are not an expert in office development," said the first person.
The office project would be developed as part of a 63-acre mixed-use development comprising high-end and mid-income homes, office space and a shopping mall.
While Omkar has already signed up with Xander Group’s retail unit Virtuous Retail South Asia Pte to build the mall, Piramal Realty is currently assessing taking up the residential component as well, said the second person. Spokespersons for Omkar and Piramal Realty declined to comment.
Omkar, primarily a slum redeveloper, recently formed a joint venture with Godrej Properties Ltd for a 4.25 acre, sea-facing property in Mumbai’s Bandra West.
In such projects, Omkar takes care of rehabilitating the slum dwellers, while the partner builds the sale component of the project on a revenue-sharing model.
According to data available on Registrar of Companies (ROC), Omkar’s total debt stood at ₹4,374.80 crore as of 31 March 2018, up 78% from ₹2,450.48 crore in 2016-17.
“Discussions are on with Piramal Realty to jointly develop a few projects owned by Omkar, including a 5-acre luxury housing project at Mahim as well," said the second person.
Omkar has had a long-standing partnership with Piramal Capital and Housing Finance Ltd, which has funded multiple projects of the developer.