Bengaluru-based Prestige Group is close to signing a joint development agreement for two office projects in Mumbai, spanning 4 million sq. ft, to mark its entry into the city’s lucrative commercial real estate market, according to three people with direct knowledge of the matter.

Prestige Group has been looking to enter Mumbai’s office market for several years and has explored similar deals in the past.

The company is in talks with DB Realty to enter into a joint development pact for two of the latter’s upcoming projects in the city, the people cited above said, on condition of anonymity.

While the project at Bandra Kurla Complex (BKC) is entirely new, it will also help develop an under-construction residential project, Turf View, at Mahalakshmi in south Mumbai. Both companies are planning to convert the second project into an office building.

“There is solid potential in the Mumbai market and lot of good opportunity in the office space. Discussions between the two parties are on right now and hopefully, it should be signed soon," said the first person mentioned above.

Email queries to Prestige Group remained unanswered. A spokesperson for DB Realty denied the development in an email response.

Mumbai-based DB Realty has been looking for partnerships with other developers to jointly develop some of its projects or land in the city.

Last month, the company entered into a joint development agreement with another Bengaluru-based firm, RMZ Corp., to redevelop Mumbai’s 60-year old Kamalistan Studio, also known as Kamal Amrohi Studio, into an office park. As part of the deal, both companies will develop and sell part of the land belonging to Mahal Pictures Ltd, an associate of DB Realty, into an office park, said a filing to the stock exchange on 10 June.

Earlier this year, real estate firm Rustomjee Group took over DB Realty’s luxury residential project, Crown, at Prabhadevi. The project was relaunched in January after DB Realty’s exit.

Consolidation in the real estate sector has gained pace, particularly in the last 2-3 years following the announcement of several reforms, including the implementation of Real Estate Regulation (and Development) Act (RERA), demonetisation and goods and services tax (GST). The ongoing liquidity crunch following the NBFC crisis in late 2018 has worsened the financial health of several developers with many scouting for partnership to reduce execution risk.

“More than 90% consolidation in Indian real estate (is taking place) at the project-level, while only a few are considering exiting realty business altogether," said a report by ANAROCK Property Consultant Ltd, adding that as many as 560,000 units worth 4.5 trillion are currently stuck or delayed across the top seven cities.

“Dearth of funds and lack of management capabilities are the main culprits, but stakeholders realized that many obstacles can be overcome by joining forces with stronger peers and leveraging mutual strengths," Shobhit Agarwal, managing director and chief executive, ANAROCK Capital, said in a 3 July note.

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