Businessman Vijay Gupta has accumulated so much land in Gurgaon over the
years that he is left with 1,500 acre even after selling huge tracts to
builders as the Delhi's suburb has grown into a global business hub.
Finding it difficult to sell off the land, Gupta has joined hands with
builders and given them the rights to build the property on his land on a
revenue share basis.
Gupta is just one among several land aggregators who have turned developers.
"Land owners see an upside in holding on to their land and doing such joint developments rather than selling. Returns are better this way," says Anckur Srivasttava, chairman of GenReal Property Advisers.
Gupta, chairman of Orris Infrastructure, recently tied up with the Noida-based The 3C Company for a 48-acre parcel of land in Gurgaon. Since Gupta had already taken approvals and permissions to build a group housing project on the land, his partner is in a position to launch the project in just four-five months. If 3C had bought land on its own, it would have taken at least a year or more to kick-start the project.
Gurgaon-based Sidharth Chauhan of Sidhartha Developers, Sharab Reddy of the Triangle Group in Bangalore and Prashant Solomon of Chintels in Gurgaon are tying up such agreements with developers to maximise their returns.
"The cost of doing projects has gone up with higher construction cost and approvals taking time. In a JDA, the developer is rid of all these issues and since there is no interest burden the overall margins are better as well," says Sharab Reddy, managing director of the Triangle Group, which holds over 500 acre that it started collecting in the mid-1980s. "The risk, too, is shared between the two partners."
Reddy, who turned a developer in recent years, is building close to one million sq ft of space in Bangalore. Just last week, he signed a JDA with a large developer in Bangalore for a 100-acre township.
In a typical agreement, the landowner and the developer sign an agreement to share revenues in 40:60 ratio. Where the price of land is very high, in city centre locations, for instance, the ratio can reverse as well.
Bangalore-based builder Puravankara Projects has adopted a similar strategy for its affordable housing brand, Provident. "Land is expensive and there is no point investing such large sums upfront, especially for affordable housing projects," says chief operating officer Jack Bastian Nazareth
Gupta is just one among several land aggregators who have turned developers.
"Land owners see an upside in holding on to their land and doing such joint developments rather than selling. Returns are better this way," says Anckur Srivasttava, chairman of GenReal Property Advisers.
Gupta, chairman of Orris Infrastructure, recently tied up with the Noida-based The 3C Company for a 48-acre parcel of land in Gurgaon. Since Gupta had already taken approvals and permissions to build a group housing project on the land, his partner is in a position to launch the project in just four-five months. If 3C had bought land on its own, it would have taken at least a year or more to kick-start the project.
Gurgaon-based Sidharth Chauhan of Sidhartha Developers, Sharab Reddy of the Triangle Group in Bangalore and Prashant Solomon of Chintels in Gurgaon are tying up such agreements with developers to maximise their returns.
"The cost of doing projects has gone up with higher construction cost and approvals taking time. In a JDA, the developer is rid of all these issues and since there is no interest burden the overall margins are better as well," says Sharab Reddy, managing director of the Triangle Group, which holds over 500 acre that it started collecting in the mid-1980s. "The risk, too, is shared between the two partners."
Reddy, who turned a developer in recent years, is building close to one million sq ft of space in Bangalore. Just last week, he signed a JDA with a large developer in Bangalore for a 100-acre township.
In a typical agreement, the landowner and the developer sign an agreement to share revenues in 40:60 ratio. Where the price of land is very high, in city centre locations, for instance, the ratio can reverse as well.
Bangalore-based builder Puravankara Projects has adopted a similar strategy for its affordable housing brand, Provident. "Land is expensive and there is no point investing such large sums upfront, especially for affordable housing projects," says chief operating officer Jack Bastian Nazareth
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