Engineering and construction major Larsen & Toubro (L&T) will invest about R500 crore on a slum rehabilitation project at Parel, central Mumbai, through a joint venture with city-based Omkar Realtors & Developers.
The project, industry players said, is a platform for L&T to foray into the Mumbai?s realty market as a developer, which it had been planning for a while now. Talks between the two parties were on for more than a year before fructifying into a deal in August.
L&T Realty, its real estate arm, will handle the construction, design and marketing of the project with Omkar, sources said. As part of the JV deal, L&T will have a revenue-sharing arrangement with Omkar. Omkar Realtors & Developers managing director Babulal Varma confirmed the association with L&T for the project to FE, but refrained from commenting on the deal and the commercial aspects of the project.
According to industry sources, the project, spread over 17 acres, will have a slum rehabilitation portion of 25 lakh square feet and a saleable portion of another 25 lakh square feet. It will have six 40-60 storeyed residential buildings. The initial sales in the project have begun and the price of the apartments is between R17,000 and R18,000 per square feet in the open market, sources said. The project is expected to be officially launched in December.
L&T’s role in a project as a developer rather than just a contractor has generated interest in Mumbai’s realty market. ?It is an interesting project at the price point at which it is being launched in a central suburban area of Mumbai,? said a real estate consultant with knowledge of the project.
Most of the residential projects being developed in and around Parel have high-end or luxury apartments with prices of R25,000 per square feet and above. ?Of late, developers have been launching mostly premium products in central suburban areas and there is a dearth of smaller apartments. This project with 2BHK, 3BHK and four bedroom options will provide that breather,? said the consultant. The apartments are sized between 1,350 and 5,000 square feet.
On the nature of the arrangement between a developer and a contractor, another consultant said that in stressful times, developers tie up with contractors, thus easing their cash-flow situation.