Developers all-out buying land
For property firms in the city, in the past few weeks a slew of land deals have brought in a mixed bag of results. Though the bigger, cash-rich firms are raking in the moolah, the remaining few others are working hard with slow sales and delayed projects in the face of an economic downturn.
By paying huge premiums as companies unlock their real estate assets, a new trend has shown developers acquiring land, thereby, shaking sluggishness in the property market.
For purchase of 88 acres owned by leading Swiss firm, Clariant Chemicals, on Kolshet road at Thane for Rs 1,154 crore, Lodha Developers reached an agreement.According the deal; the developer can start with the construction of nearly 8 million sq ft on the land.
To acquire seven acres owned by KEC International Ltd, an RPG group company, Tata Housing Development Company Ltd is learnt to have almost clinched a deal for over Rs 200 crore which is on Pokhran road.
Already the company has shifted its Thane factory to Vadodara. In Borivali recently, Oberoi Realty Ltd bought 25 acres from Tata Steel Ltd for Rs 1,155 crore.
In the recent past as per the property consultants, large and small corporate companies with debt burdens have been selling assets to improve their financial condition.
In the past two years, as per the report of Standard Chartered Equity Research, such asset sales at about Rs 55,000 crore. Gammon India, which is looking to sell the 140-plus acres it purchased from leading car maker Pal Peugot at Dombivli.
The CMD added, for debt-burdened companies, Asset sales are essentially the last resort. However, the momentum in land transactions will have developers follow these deals on the power of their own cash reserves or with ample private equity (PE).
A property analyst wanted to highlight on the futuristic value of the deals. He added, Many land parcels in nature are industrial and they can be converted to residential or office space easily.
On account of persistently weak sales, Liquidity is drying up with little sign of recovery. In Mumbai and the National Capital Region, being major property markets residential property sales in October-December declined by 30% and 13%, respectively over a year, as told by a property consultancy firm Knight Frank.
Several builders have realised increasing sales is not as simple as it is for the cash-rich builders, as told by property brokers.
He added therefore it was natural for them to tie up with bigger brands for better sales and return on interest by a minimum of 20%.
Source: Times of India
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