Realty developer Wadhwa Group is in advanced talks with Japanese institutional investor Marubeni Corp to set up a dedicated platform to acquire new projects and redevelopment of residential societies in Mumbai.
This is the first time a global entity is looking to take financial exposure to execution of such redevelopment projects.
Marubeni already has a partnership with the Wadhwa Group. Last year, it entered into an agreement to invest in the realty developer’s nearly 1-million-sq-ft residential project, Atmosphere, in Mumbai’s Mulund suburb. That was Marubeni’s maiden investment in Indian real estate.
“In addition to our focus on Japan and China, we are investing in India as the property market here offers strong growth potential. Based on the response to our existing engagement with the Wadhwa Group, we are looking to take this partnership further,” said a Marubeni spokesperson.
The Wadhwa Group is eyeing redevelopment of old and dilapidated tenanted projects in India’s commercial capital as a growth opportunity for the company.
It has already set up a team to evaluate and acquire such redevelopment projects in South Mumbai and along the western belt of the city, including Worli and Bandra to Versova.
“We are in advanced discussions with several societies at Mumbai’s prime locations and aim to kick start these projects in 6-9 months. Based on our execution record, these societies and existing financial investors in the project have shown interest in handing over the project to us. We are actively looking at making redevelopment vertical a key part of our portfolio in the near future,” Wadhwa Group managing director Navin Makhija told ET, while confirming Marubeni’s interest in the separate investment platform.
According to Makhija, timely delivery of these redevelopment projects is the most concerning factor for these societies, as many such projects have faced delays in the past due to tug of war between tenants and the developer. Therefore, transparency and confidence in the developer executing the project is crucial.
The company is looking at mid- to large-sized societies and tenanted societies for development and has earmarked an initial investment of over Rs 300 crore for the first phase of such developments.
The Union Ministry of Environment, Forest and Climate Change has recently approved the Coastal Zone Management Plan (CZMP) for Mumbai city and its suburbs. Following this, several housing societies will now be eligible for redevelopment based on the approved CZMP plan, as these areas will get a higher floor space index, (FSI) or permissible development, at par with the rest of the city.
The move is expected to create a win-win situation for both tenants who can expect better terms and Grade A developers for whom redevelopment projects will become more feasible and attractive to take over.
For Marubeni, India is expected to become a major destination for its overseas real estate business.
The Japanese conglomerates’ activities in India will not be limited to the promotion of smart cities and other such real estate development business. In future, it plans to venture into a number of related development businesses, including social infrastructure maintenance, new sales channels and services these businesses produce.
Apart from the US, Singapore and Chinese investors, and several investors and developers from Japan are eyeing opportunities in this segment given the relatively better economic growth estimates.
Mitsubishi Corp was the first Japanese corporation to invest in Indian real estate, after it agreed to deploy Rs 180 crore in 2018 for a 70% stake in a residential property being developed by Shriram Properties in Chennai.
In 2019, Japan’s Sumitomo Corp concluded one of the largest land transactions in the country, when it bought a 3-acre plot in Mumbai’s business district of Bandra-Kurla Complex for Rs 2,238 crore.
