The Hindu Business Line : Mumbai warms up to build-and-lease

Investment World - Real Estate & Construction
Industry & Economy - Real Estate & Construction
States - Maharashtra
Mumbai warms up to build-and-lease

While SEZ norms do not dwell in detail on amenities, most developers have packaged their offerings to promote ‘walk-to-work’ culture.

S. Shanker

In Mumbai Metropolis, where land is scarce and comes at a premium, the build-and-lease model adopted in special economic zones appears to have many takers. This is despite some instances of developers tying up with their clients to put up the structures.

Modern Mills intends to adopt the leasing route for its proposed Rs 650-crore software and hardware SEZ at Kapoli, which is on the outskirts of Mumbai city.

The company has obtained a formal approval and is expecting the project’s notification shortly.

About 4 million sq.ft will be built in three years, tentatively beginning this December, and leased out at Rs 32 per sq.ft. And, even before the launch, three multinationals and three large domestic players seem keen on inking deals with the promoters.

Beginning with a 37-acre spread valued at Rs 220 crore, Modern has now acquired an additional six acres for Rs 18 crore to spruce up its offering.

A leading public sector bank has, in principle, agreed to fund the project in consortium with a few member-banks. The debt portion is pegged at Rs 350 crore.

“The promoters intend to pool in Rs 205 crore and about Rs 100 crore will flow in through our internal accruals,” says Mr Vijay Kumar Jatia, CMD, Modern Mills Ltd.

Modern Mills, through its subsidiary Mills Modern India Property Developers Ltd, will execute the project. Keen on making a difference in the project, the promoters will also focus on providing amenities such hotels, schools, healthcare and office space.

Identical model

Mumbai-based Marathon Group is also working on an identical model though Mr Mayur Shah, Managing Director, says any offload of stake will be to real-estate investment trusts.

The company is to develop a 26-acre Rs 1,800-crore IT/ITES special economic zone on its 100-acre holding in Navi Mumbai. The SEZ is set to meet the green building ratings (LEED certification).

About 1.3 million sq.ft is to be built in the first phase, of which 60 per cent will be IT space, and the rest will comprise retail, hospitality and residential. Investment will be about Rs 900 crore and revenue generation in the first phase is expected to exceed Rs 1,750 crore. In all, the Marathon Group will construct over 3 million sq.ft.

While SEZ norms do not dwell in detail on amenities such hospitality, retail, schools and healthcare, industry sources say that most developers have packaged their offerings to address tenant needs, especially when the intention is to promote ‘walk-to-work’ culture.