What’s at­tract­ing builders from south and west to NCR?

Keen to man­age projects, gain a foothold in the NCR mar­ket and en­sure timely de­liv­ery of homes

HT Estates - - FRONT PAGE - Van­dana Ram­nani

With the Real Es­tate Reg­u­la­tory Act kick­ing in soon, devel­op­ers are un­der pres­sure to com­plete projects on time or pay a penalty to buy­ers. Many of them in the NCR mar­ket are en­ter­ing into devel­op­ment man­age­ment agree­ments (DMA) with ei­ther na­tional realty brands such as Go­drej or Tatas or with lo­cal devel­op­ers who have a track record of well ex­e­cuted and on­time de­liv­ery.

Not only are realty play­ers from the west ( such as Tata Hous­ing and Go­drej Properies Ltd) and south In­dia ( Sobha Devel­op­ers) keen on gain­ing a foothold through such agree­ments in the north In­dian mar­kets, in­ter­na­tional con­struc­tion firms have also evinced in­ter­est in man­ag­ing the en­tire devel­op­ment pro­cess which in­cludes con­cep­tu­al­is­ing, de­sign­ing and mar­ket­ing projects in north In­dia,

Go­ing for­ward, the mar­ket is likely to see such devel­op­ment agree­ments be­ing signed be­tween brands/lo­cal play­ers and land own­ers. Roles will be clearer. Those with core com­pe­tency of ag­gre­gat­ing land parcels and get­ting clear­ances will con­cen­trate only on ac­quir­ing land. Oth­ers do­ing con­struc­tion work are likely to fo­cus on only project ex­e­cu­tion con­tracts. Those ben­e­fit­ing the most from such trends are go­ing to be buy­ers as con­struc­tion work will be speeded up, mak­ing pos­ses­sion de­lays a thing of the past.

While most branded devel­op­ers who are ex­plor­ing or have en­tered the NCR mar­ket are only open to han­dling green­field (newly launched) projects, oth­ers are “cau­tious” but open to the risk of as­so­ci­at­ing them­selves with builders with late de­liv­ery records. Many would want to assess the prob­lems faced by the NCR devel­op­ers be­fore the tie-up lest their brand name gets neg­a­tively im­pacted

The NCR devel­op­ers are also go­ing in for last-mile fund- ing from pri­vate eq­uity firms t o com­plete t heir ex­ist­ing projects. Last week, the Logix Group re­ceived last mile fund­ing worth ₹ 400 crore from New York-head­quar­tered al­ter­na­tive as­set man­ager Apollo Global Man­age­ment, Llc to be used specif­i­cally to com­plete its ex­ist­ing projects in sec­tors 137, 143 and 150. “The money has been put into a hold­ing com­pany of Logix and will be used for last­mile fund­ing to com­plete the con­struc­tion of on­go­ing four projects where we in­tend de­liv­er­ing close to 8,500 apart­ments in one-and-a-half years,” says Shak­ti­nath, CMD, Logix Group.

Out­sider realty com­pa­nies are go­ing in for devel­op­ment man­age­ment agree­ments (DMA) to part­ner with the lo­cal landowner to con­cep­tu­alise, de­sign, con­struct and mar­ket the project in re­turn for a devel­op­ment man­age­ment fees that ranges from 12% to 15%. They are also sign­ing joint devel­op­ment agree­ments (JDA) with the lo­cal land part­ner on a rev­enue shar­ing ba­sis. Both sides ben­e­fit as the NCR devel­op­ers get to com­plete their projects on time through DMA and landown­ers mon­e­tise land parcels that they would not have de­vel­oped for the next few years. It also helps the par­ties share risks in a slow mov­ing mar­ket.

As of now, real es­tate was a free for all, any­body with a land bank could be­come a de­vel­oper. As the mar­ket ma­tures and states get ready to adopt RERA guide­lines, only the fittest builders who have ex­e­cuted and de­liv­ered projects on time in the past will sur­vive ANCKUR SRI­VAST­TAVA, GenReal Ad­vis­ers

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