News: Consolidation in real estate may speed up amid Covid-19-20/06/2020
Updated On: June 20, 2020
Consolidation in real estate may speed up amid Covid-19
In some recent transactions, Shriram Properties has entered into a development management agreement with SLV Infra for a plotted development project in Bengaluru.
BENGALURU: The Covid-19 pandemic is expected to speed up consolidation in the real estate sector. Cash-starved developers have started turning to financially-sound builders to take over stuck projects, with stressed developers also increasingly forming joint ventures, monetising land and extending development management contracts across major cities.
In some recent transactions, Shriram Properties has entered into a development management agreement with SLV Infra for a plotted development project in Bengaluru. Godrej Properties has entered the Faridabad market with a residential plotted development. The land parcel, spread across 43.61 acres, was acquired from BPTP.
In Delhi-NCR, M3M India plans to partner with multiple developers to develop a 185-acre land parcel on the Dwarka Expressway through multiple joint development agreements.
“Through this collaboration with SLV, the company plans to launch 4-5 plotted land development projects in the next few months,” said Murali Malayappan, chairman and managing director of Shriram Properties, which has adopted a development management (DM) model as a growth strategy.
A joint venture or development management agreement will put the large developer in the driver's seat as the control will be passed on to the new entity with the new entrant holding majority stake.
With the established developer’s track record and ability to maintain cash flows, the project benefits on the execution and marketing fronts.
Though this model provides lesser margins it is more capital efficient for developers and landowners. Realty developer Assetz Properties, which predominantly focuses on the asset light strategy, has seen a rise in such proposals in recent times.
