L&T Realty, the real estate development arm of engineering major Larsen & Toubro has entered into an agreement to jointly develop a 12.2-acre land parcel in Thane’s Panchpakhadi locality.
The project involving rehabilitation of a large layout of slums has a total development potential of over 3.12 million sq ft.
The current developer Jagdale Infrastructure has received a letter of intent from the Slum Rehabilitation Authority in 2022 and is now bringing in L&T Realty as its partner in the project.
As per the agreement, L&T Realty, as the lead developer, will get 69% share of profits from the project and the balance 31% will go to Jagdale Infrastructure. The project involving over 20 slum pockets is expected to be completed in five years.
L&T Realty’s share in the projects’ profit is estimated to be nearly Rs 698 crore, while the other partner is expected to fetch a profit share of nearly Rs 303 crore, showed the documents accessed through CRE Matrix.
L&T Realty has executed the joint development agreement through one of its subsidiary L&T Parel Project. It has paid stamp duty of over Rs 34.88 crore for the registration of the transaction that took place on May 7.
The said land parcel is originally owned by the government of Maharashtra. As per a notification in October 2016, the plot was declared as slum rehabilitation area under the provisions of the Maharashtra Slum Area (Improvement, Clearance & Development) Act, 1971.
The land has been encroached upon and occupied by slum dwellers who had constituted themselves into over 20 slum societies. The slum dwellers’ rehabilitation component to be developed as part of the project is estimated to be over 1.2 million sq ft.
As part of the agreement, L&T Realty will undertake the design, development, construction, completion, marketing, branding, and sale of the free-sale component of the project.
The floor space index required for the free-sale component will be generated through proportionate rehab component. In addition to its responsibilities towards free-sale buildings, L&T Realty is also expected to oversee the partner’s responsibilities of obtaining approvals and construction of rehabilitation.
ET’s email query to L&T Realty and Jagdale Infrastructure remained unanswered until the time of going to press.
Projects involving joint development and redevelopment play a crucial role in the functionality of most property markets. This importance is heightened in the context of rising land prices and the decreasing availability of vacant land parcels in major urban centers.
As cities expand and available space becomes scarcer, such joint redevelopment projects provide innovative solutions to optimize land use while enabling the revitalization of existing properties and the efficient utilization of limited space.
By addressing these challenges, joint development and redevelopment initiatives significantly contribute to sustaining the growth and vibrancy of urban property markets, making them indispensable in the current real estate landscape.
