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Prestige Estates Projects, a real estate developer, has signed an agreement to redevelop the Shivshahi Co-Operative Housing Society in Mumbai's Worli locality. The project involves 192 tenements spread over 3.3 acres opposite the GlaxoSmithKline Pharmaceuticals property. The redevelopment project has been stalled for more than a decade.
Prestige Estates has already repaid a loan worth Rs 170 crore raised by the earlier developer and will invest another Rs 578 crore towards construction costs, compensation to society members, and premium towards availing fungible floor space index. The company expects a revenue potential of nearly Rs 6,000 crore from the project, which is estimated to be completed within the next four years.
Officials from the company claim that the estimated development potential of the project is said to be around 1 million square feet with a free-sale component of around 7.5 lac square feet. The company plans to develop a premium residential project and has paid a stamp duty of nearly Rs 29.12 crore for the agreement's recent registration.
Prior to the new development agreement, the society had signed a pact with realty developer Wondervalue Realty Developers, who had raised a loan facility from a consortium of banks. Some members of this consortium had initiated enforcement proceedings in the Debt Recovery Tribunal for loan recovery. The consortium has granted its no-objection for the one-time settlement and discharge of the loan and withdrawal of recovery proceedings based on conditions agreed with the new developer.
The land parcel that houses the buildings constructed in the 1950s was leased by the Municipal Corporation of Greater Mumbai to the Maharashtra Housing and Area Development Authority for 999 years. The plot was then leased to develop housing for economically weaker sections of industrial workers. Apart from the residential buildings, the land parcel adjoining the same also had around eight huts spread over nearly 2,100 sq ft and society offices. Of these, seven have been vacated and demolished by the earlier developer.
In recent years, redevelopment projects have been on the rise in Mumbai, with many developers opting to redevelop old and dilapidated buildings. Mumbai's real estate market is heavily influenced by supply and demand, and the high demand for properties has led to a shortage of available land parcels. This situation has created a significant opportunity for developers to redevelop old properties, leading to a surge in redevelopment projects across the city.
At present, around 19,000 properties in the city are awaiting redevelopment, providing a significant business opportunity for developers. To tap into this opportunity, developers are offering various incentives to society members to convince them to agree to the redevelopment of their properties. The incentives include offering new apartments with larger carpet areas, monetary compensation, and a share in the future profits of the project.
Overall, the redevelopment of old properties is expected to continue to drive Mumbai's real estate market, and developers like Prestige Estates Projects are poised to benefit from this trend. With the demand for properties remaining high and the shortage of available land parcels continuing, the redevelopment of old properties is likely to remain a lucrative business opportunity for real estate developers in Mumbai.
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