L&T Realty, the real estate development arm of Larsen & Toubro, has signed an agreement with Jagdale Infrastructure for the joint development of a 12.2-acre land parcel in Thane’s Panchpakhadi locality.
The project, which involves the rehabilitation of a large slum area, boasts a total development potential exceeding 3.12 million square feet. Jagdale Infrastructure, the current developer, received a letter of intent from the Slum Rehabilitation Authority in 2022 and has now brought in L&T Realty as its development partner. Under the terms of the agreement, L&T Realty will serve as the lead developer and will receive a 69% share of the project’s profits, while Jagdale Infrastructure will retain the remaining 31%. The project, encompassing over 20 slum pockets, is slated for completion within five years. According to documents accessed via CRE Matrix, L&T Realty’s profit share from the project is estimated to be nearly Rs 698 crore, with Jagdale Infrastructure’s share projected at approximately Rs 303 crore. L&T Realty has executed the joint development agreement through its subsidiary, L&T Parel Project, and has paid a stamp duty of over Rs 34.88 crore for the transaction, which was registered on May 7.
The land parcel is originally owned by the government of Maharashtra and was designated as a slum rehabilitation area in October 2016 under the Maharashtra Slum Area (Improvement, Clearance & Development) Act, 1971. The land has been encroached upon and occupied by slum dwellers who have formed over 20 slum societies. The rehabilitation component of the project is estimated to cover over 1.2 million square feet. As part of the agreement, L&T Realty will handle the design, development, construction, completion, marketing, branding, and sale of the free-sale component of the project.
The floor space index (FSI) required for the free-sale component will be generated through the proportionate rehabilitation component. L&T Realty will also oversee the partner’s responsibilities, including obtaining approvals and constructing the rehabilitation units. Joint development and redevelopment projects are crucial for the functioning of property markets, especially in the context of rising land prices and the decreasing availability of vacant land parcels in major urban centres. Such projects offer innovative solutions to optimise land use, revitalise existing properties, and efficiently utilise limited space.
By addressing these challenges, joint development, and redevelopment initiatives significantly contribute to the growth and vibrancy of urban property markets. They are indispensable in the current real estate landscape, ensuring sustainable development and efficient land utilisation amidst rapid urbanisations.
