Mumbai: In the largest real estate transaction after lockdown, Sunteck Realty, a real estate developer, has signed an agreement to develop a 50-acre sea-facing land in Vasai, near Mumbai.
The deal indicates a stress-led consolidation in the sector that is expected to escalate amid the Covid-19 pandemic.
In an effort to advance their stagnant projects, cash-hungry companies and owners are converting their parcels by forming alliances with developers with strong financial strength, entering into development management agreements, and even considering explicitly selling them.
Sunteck will develop the entire project in phases over the next five to seven years, and the total development potential is expected to reach 4.5 million square feet with revenues of Rs 5,000 crore.
Kamal Khetan said: “The project will greatly satisfy the middle-income segment, especially after the Covid-19 scenario, because it meets the needs of emerging clients: residential buildings that complement today’s luxurious lifestyle and meet the requirements of the work at home.” Chairman and Managing Director Sunteck Realty and CEO.
The listed company will develop the project with the owner through the revenue sharing agreement. The owner who will be responsible for the plot and approvals gets 25% of income. Sunteck will earn 75% of revenue and undertake planning, construction, implementation, branding, sales and marketing efforts.
The construction and implementation costs of the project are estimated at Rs 2,000 crore.
Khaitan said the site has a good connection, upcoming infrastructure developments and all the major services around it, adding that the project will be a major addition to Sunteck’s strong growth engines, including its projects on Signature Island at Bandra-Kurla Complex (BKC), SunteckCity at Oshiwara District Centre (ODC) in Goregaon and SunteckWorld in Naigaon.
“Despite the previous economic slowdown and the subsequent impact of Covid-19, Sunteck has kept pace with development and promised home buyers to deliver the homes. We will continue to reward our investors by acquiring such valuable deals.”
According to a recent analysis by the ICRA rating agency, large real estate developers with established market positions, strong balance sheets and sufficient liquidity have evaded the volatile business environment due to the COVID -19 pandemic better than smaller entities.
As a result, ongoing consolidation in this sector is expected to increase further, with larger, more established players gaining a greater market share.