Piramal Realty will construct a residential high-rise on the 2.2-acre plot
Piramal Realty, an Ajay Piramal group company, is set to take over DB Realty’s Marine Drive project in Mumbai for close to Rs 1,000 crore (Rs 10 billion), a company executive said on Monday.
Piramal Realty will construct a residential high-rise on the 2.2-acre plot.
“It is more or less a done deal. We are working on permission from the government to construct the residential tower,” an executive said.
DB Realty had planned a 5-star hotel on the plot that failed to go through because of legal issues involving the company’s promoters and a real estate slowdown. DB Realty shares closed flat at Rs 52.95 on Monday.
The plot was behind heritage buildings on Marine Drive and would, therefore, not be subject to height restrictions, said the executive, who did not wish to be named.
Piramal Realty's investment comes in the midst of a real estate slowdown.
With investments of close to $3 billion, Piramal Realty has emerged as the second largest investor in the sector after HDFC.
The company is constructing a residential project in Byculla, a commercial complex in Kurla, and residential projects in Thane and Mulund.
Piramal Realty received equity funding of Rs 1,800 crore (Rs 18 billion) from Warburg Pincus and Rs 900 crore (Rs 9 billion) from Goldman Sachs in July.
A large part of these funds will be used in the Marine Drive project.
The investments by Warburg Pincus and Goldman Sachs were the biggest foreign direct investment in the Indian real estate sector in recent times, company executives said.
“With the Indian economy growing at seven-eight per cent annually, demand for real estate will pick up as developers reduce prices,” said the executive. Property prices are already down and are expected to fall further.
Rating firm Moody’s recently said property developers would face a challenging environment in the next 12 months.
In Mumbai, unsold property stock worth Rs 1,00,000 crore is stuck with developers.
The credit ratings of Piramal Realty’s rival, Lodha Developers, were downgraded by Moody’s and Fitch due to weak operating performance.
Image: Ajay Piramal. Photograph: Reuters
