Mumbai-based Godrej Properties Ltd, the real estate development arm of the Godrej Group, has entered into an agreement with associate company Godrej and Boyce (G&B) for the development of the latter’s large land holdings in the eastern part of Mumbai.
Under the arrangement, Godrej Properties will act as a development manager for the conceptualization, design, sales and marketing of the future development on the G&B-owned land in Vikhroli, a Mumbai suburb. As owner-developer, G&B will bear the responsibility for the construction of all future projects through its construction arm.
According to estimates by property analysts, the Vikhroli land chunk is one of the largest in the city, around 3,000 acres, of which up to 1,000 acres can be developed; the rest is taken up by mangroves and cannot be developed under environmental laws.
A Godrej Properties executive said the deal worked well for the company.
“This will offer sizeable, somewhat guaranteed margins to us while the investment is very less,” said Pirojsha Godrej, Executive Director, Godrej Properties. “We have been discussing this arrangement for some time and reached this formula that will apply to all future projects on this land.”
The development could be among the biggest in Mumbai, he added.
The business district at Bandra Kurla Complex measures around 350 acres and the redevelopment of Dharavi spans 550 acres.
Godrej Properties will receive a 10% fee of the total revenue generated from the development, and will spend 20% of the amount it receives on sales and marketing.
The design and construction costs will be borne by G&B.
While Godrej Properties has, in the past, entered into joint development agreement with various Godrej group firms to develop land parcels in cities such as Mumbai and Bangalore, the development management agreement it has entered into with G&B is novel.
The first project under this agreement will be kicked off with the launch of Godrej Platinum, a high-end residential development of approximately 600,000 sq. ft.
The project will be a part of the ongoing 35-acre mixed-use development, The Trees, at the Vikhroli estate.
