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Lodha Developers is shifting its commercial real estate business model

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Lodha Developers

Lodha Developers is shifting its commercial real estate business model to “build and lease” rather than outright sale of properties

Mumbai: After building a sizeable residential portfolio, India’s largest realty firm in terms of sales, Lodha Developers Pvt. Ltd, is looking at commercial real estate for its next level of growth. The firm is planning to build around 9 million sq. ft of office space, 1 million sq. ft of retail space and a warehousing and logistics park in Mumbai on 150 acres with an investment of nearly Rs2,500 crore in the next five years.

With these plans, the Mumbai-based real estate firm is also shifting its commercial real estate business model for the first time to “build and lease” rather than outright sale of the properties as it looks to develop a substantial commercial lease portfolio that could later be monetized either through a REIT (real estate investment trust) listing or sales to investors.

“We will now aggressively ramp up our commercial asset business. Our plan is to have nine million square ft of office space under our management… This is part of our larger aspiration of creating a (commercial) business valuation of $1 billion by 2021,” Shaishav Dharia, regional chief executive officer, Lodha Group told Mint.

He said work has begun on three commercial projects that have a potential development area of 2.5 million sq. ft. The firm is also in the process of building a 150-acre industrial logistics park as part of its mixed used development project—Palava City—in Mumbai.

“We as a group already have 480 million sq. ft of developable land. All of this is in the Mumbai Metropolitan Region (MMR) and already paid for. When you have such a big land parcel, it creates another opportunity for us, particularly in terms of having large mixed development in our portfolio,” Dharia said.

The firm is in the process of building two commercial towers with around 700,000 sq. ft of space over 87 acres of land at Kolshet in Thane. It had bought the land parcel in 2014 from Clariant Chemicals for Rs1,154 crore. Within the Palava mixed-use development, Lodha has also chalked out plans to start construction of office buildings with 700,000 sq. ft of space in the next two to three months.

Besides, the firm expects to deliver another 900,000 sq. ft of office buildings by 2018 that are currently being developed as part of the New Cuffe Parade project, a mixed use development at Wadala in Mumbai.

“So around 2.3 million sq. ft of commercial space will be off the ground in the next two to three months,” Dharia said.

He said building these assets would require an annual investment of around Rs500 crore for the next five years. This would mainly be funded through internal accruals.

Lodha’s plan to ramp up its commercial real estate is part of the larger plan to own substantial leased assets in the next five years. So far, the company’s only source of rental revenue is a mall at Palava which was delivered in September last year.

Though it has developed around 5 million sq. ft of office space in the last five years, it has only followed the “build and sell” model.

“Going forward, the business plan is not to sell commercial assets. We will basically be owning it and it will purely be on a leased model only,” Dharia said, adding that the growing interest for REITs has made commercial real estate an attractive business opportunity for many builders.

The slump in the residential market has had no effect on the demand for commercial real estate, which has continued to pick up on the back of interest shown from information technology (IT) and IT-enabled firms, banks and e-commerce companies.

According to property consultant CBRE, office space uptake grew by 9% in 2016, touching an all-time high of 43 million sq. ft across major cities in the country. Meanwhile, new supply declined by 12% to about 35 million sq. ft.

“There has been a surge in demand for leased assets whether it is offices or retail. It has consistently picked up since 2015. But there is a supply crunch in new grade A offices right now. This definitely creates an opportunity for us,” Dharia said.

Source:  livemint.

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

On Thursday, Andhra Pradesh Chief Minister N. Chandrababu Naidu said with the estimated expense of Rs. 5,556.74 crore, the construction of more than 2,44,164 houses, out of the proposed 3,03,044, has been commenced under the NTR Housing Scheme 2017.

While addressing the second day of the Collectors’ Conference he also said the construction of the remaining houses will begin soon. He mentioned that Prakasam and the Kurnool districts are ahead of the schedule in the urban housing scheme. Also, the works are in full swing in the Nellore and the Guntur districts under the rural housing scheme.

According to Naidu, the government will complete 2.5 lakh houses by January next year and another lot of two lakh houses by June.

By October 2, 2018, the state government intends to finish the construction of all the houses and plans to celebrate with massive house warming ceremony with local public representatives. This will help them set an example for housing schemes in other states.

Also Read: Raunak Group Presents Apna Pehla Ghar Campaign

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A Mumbai Suburbs’ Swift Transformation From Industrial To A Residential Zone: Wadala

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A Mumbai Suburbs’ swift transformation from industrial to a residential zone: Wadala

An industrial zone primarily, Wadala has undergone a drastic transformation in the past decade. Now an upcoming residential area, this Mumbai suburb is one of the seven islands to form the modern Mumbai. It is located on the Harbour line of Mumbai’s railway network.

Due to its proximity to BKC, large scale land development was inevitable, thus fueling the real estate market. Wadala is bordered by Dadar on the West, Matunga on the Northwest and Sewri on the South. Nestled between south Mumbai and the suburbs, Wadala enjoys strong connectivity by road and rail to most parts of Mumbai.

It has a number of flyovers like the Anik Panjrapol Link Road, Elevated road and Santacruz flyover. Thane, CST and Chembur are connected via the Eastern Highway while the Western Highway connects the locality to Bandra and Borivali. Wadala has the biggest bus depot in Mumbai. Furthermore, the multiple infrastructure initiatives like the monorail, Truck Terminal and the expansion of Highway are in various stages of development.

All this has given rise to residential demand and pushed the property value over the last few years. One of the most populated areas in Mumbai, Wadala has a large number of old temples, churches and dargahs, university campuses, schools, reputed hospitals and is also home to a former world’s largest IMAX dome theater. There are many stores, showrooms and malls around Wadala like the R Mall, High Street Phoenix and Palladium Mall.

Ramesh Nair, COO – business and international director, JLL India says, “A decade ago, property prices at Wadala were as low as Rs 2,800 per sq. ft. and it rose to Rs 14,000 a few years ago.”  As the infrastructure plans are on their way, so are the renowned developers like Ajmera, Dosti Group and Lodha Group among others.

Wadala at present offers one of the highest returns on real estate investments in the region. All the above-mentioned developers have their luxury projects in the area.

Ajmera I-Land introduces Aeon, Zeon and Treon towers with 2, 3 and 4 BHK plush homes. Conceptualized by renowned Singapore based Architects Space Matrix, these spaces with top-of-the-line lifestyle amenities exude exemplary class and finesse. The first residential floor begins at 110 feet from the ground level and offers several modern lifestyle amenities like kid’s pool, swimming pool, gymnasium, club house, open space and landscaped gardens, yoga room, kid’s play area and senior citizen corner.

Dosti Ambrosia is a 36-storey tower nestled in the 18 Acre Township of Dosti Acres. The architecture of the project was undertaken by renowned Hafeez Contractor in the 2 and 3 BHK apartments. It offers an exclusive rooftop swimming pool with 40,000 sq. ft. of landscaped gardens. You will find all modern conveniences like Gymnasium, Tennis Court, Indoor Badminton Court, Yoga and Meditation Room, Elderly Corner, Banquet Hall, Indoor Games, Indoor Badminton Court, Guest Rooms, Restaurant, Grand Entrance Lobby, Kids Play Area, 2 Club Houses and an Amphitheatre.

New Cuffe Parade by Lodha Group offers its residents all the comforts of a world-class lifestyle. The 2 and 3 BHK homes are spread in over 23 acres of land with 15 acres of stunning landscape and 75,000 sq. ft. of the club house. It includes 11 swimming pools, an organic farm, cricket pitch and multiple themed gardens. The buildings are designed by the world renowned WOHA in Singapore and the landscape was planned by Sitetectonix in Singapore.

Also Read: Mumbai to get Building Taller than Burj Khalifa, Road Bigger than Marine Drive

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Rajasthan Government May Hike The Affordable Housing Prices

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Rajasthan Government May Hike The Affordable Housing Prices

The prices of homes under the ambitious Mukhyamantri Jan Awas Yojana are expected to be increased by the state government.

According to the sources in the empowered committee meeting to be held on Monday, a proposal to increase the cost of a low-income group (LIG) and economic weaker section (EWS) houses will be proposed. Urban development and housing (UDH) minister Srichand Kriplani will chair the meeting. The LIG and EWS houses, presently are being constructed on government lands by private builders. These homes are sold at a fixed rate of Rs 1,250 per sq feet; out of which 1000 rupees per sq ft is given by Urban Improvement Trust (UIT), development authorities and local bodies to the builders.

According to provision 4(A) and 4(B), the developers are supposed to build EWS and LIG houses on government land. Seventy-five percent of such government land can be used in building EWS and LIG houses, while the remaining 25% can be sold by the developers. However, since the rates provided by the government are less the developers are not showing interest to construct houses under these categories. Sources said, “In Jaipur, not a single developer has shown interest in constructing houses under this model. The JDA has invited expression of interest (EOI) several times.”

The UDH is leaving no stone unturned to attract the builders in order to achieve the target of constructing 10 lakh houses by 2019. The sources mentioned, “As per the new proposal, the department has proposed to provide Rs 1,600 per sq feet rate to the developers. The land rates have increased subsequently over the period of time; this is why increasing rates has become a need of the hour.”

Sources further added, “The developers are constructing G+3 buildings at present. However, it is not cost-effective. It has been proposed to construct G+2 buildings for LIG and EWS category.”

Also Read: The Impact Of Regulations On The Real Estate Market

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