Lodha in pact for slum redevelopment project for ₹359 crore

Macrotech Developers has obtained the development rights of a free sale component of a slum redevelopment project in Worli, Mumbai for ₹359.5 crore.

The development agreement has been signed by the company with Sattadhar Constructions and a firm Manju Paras Porwal for the land parcel situated at Khan Abdul Gaffar Khan Road, the total size of the property being 7,911 square metres or slightly over 85,000 square feet.

The amount paid is the market value of Macrotech’ s share in the total land area.

Construction work on the property had already been started by the firm for the accommodation of slum developers about 172 of whom are occupying the buildings. These buildings will be demolished and then redeveloped and while one part is earmarked for the slum inhabitants the free sale component will be developed by the Lodha group under the terms of the agreement.

The project is to be completed within 60 months of getting the commencement certificate from the State Real Estate Regulatory Authority, according to registration documents accessed by data analytics firm CRE Matrix.

After the completion of the project, the Lodha group and Sattadhar Constructions will be equally sharing the net revenue generated through the sale of flats constructed on the free sale component.

The agreement also details the usage of cash flows from the project. In the first 18 months of the launch of the project, all sale proceeds will go towards project costs. After that, subsequent cash flows will go towards paying off interest on loans, the principal amount on the loans and so on. Once, all these liabilities are discharged then the two parties can start to share the revenue.

With Mumbai racing to rid the city of slums, where people live in small tenements in extremely unhygienic conditions, slum redevelopment has picked up pace as big developers are taking up such projects. Their main lure is that along with the slum redevelopment they get additional FSI or floor space index in the same area where they can build premium apartments that can be sold to recoup the cost of rehabilitation of the slum dwellers.