Rs 1.5 lakh per sq ft: South Mumbai societies wooed with 5-star lunches as developers pitch crores-worth redevelopment
MUMBAI: This weekend, a prestigious luxury hotel in south Mumbai is the venue of meetings for members of a posh housing society on Altamont Road, one of the priciest residential enclaves in India.
Three of Mumbai's leading developers will be meeting them separately to pitch their offers for redevelopment. The competition among developers for such prime properties will be aggressive considering that new apartments can fetch prices upwards of Rs 1.50 lakh a square foot.
On Saturday, a prominent developer from Goregaon booked a large banquet hall in the hotel. Another big developer has booked an entire restaurant on the 19th floor of the same hotel on Sunday for the society members, followed by lunch.
Later in the afternoon, the third developer with a national footprint will present its redevelopment plan.
Mumbai's redevelopment mania has reached new levels, with builders going out of the way to entice housing societies in tony areas such as Malabar Hill, Nepean Sea Road, Carmichael Road and parts of Bandra. A prominent developer justified these meetings in luxury hotels as a "necessary business development exercise".
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"It is expensive, but the developer must lay out his vision at a comfortable venue," he said.
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'Spend on 5-star lunches no big deal when projects are worth crores'
A developer, who finally bagged the redevelopment rights to a sea-facing Breach Candy society, invited its members for a final presentation over 'drinks and dinner'' in a south Mumbai five-star hotel.
A prominent developer has justified such meetings. The lunch could cost Rs 5,000 a plate and the entire presentation about Rs 5 lakh to Rs 10 lakh.
'The entire society is invited. So, there are no underhand deals with a few members,'' said the developer, who did not want to be identified. 'What we require is a proper LED screen, sound system and proper cooling for the presentation,' he added.
A property market source narrated another interesting incident recently. A senior executive in a venture capital fund was shocked when he saw the budget drawn out by a builder who had applied for debt financing of a redevelopment project.
The funding requirements are normally divided into pre-Intimation of Disapproval (IOD) and postIOD funding. Pre-IOD funding has the normal heads of payments to be made to BMC for scrutiny fees, NOCs from various departments including fire brigade for which huge amounts have to be deposited, purchase of floor space index (FSI) by payment of premiums, purchase of transfer of development rights (TDR) from the market, and so on.
While scrutinising the funding requirements, a new head called 'entertainment' caught the attention due to its sheer quantum of numbers. Naturally, the person recommending sanctioning of amounts to his board has to check the details of each head, and 'entertainment', which ran into tens of crores of rupees, came up for scrutiny. The builder then revealed that to get a project in posh areas, lunches and dinners have to be organised at select five-star hotels initially for office bearers and managing committee members, then for all the members who will help reach the 51%-plus target for redevelopment.
The executive expressed his apprehension about convincing his board about the necessity of such a huge expenditure and felt that the head under which such huge amounts are sought— 'entertainment'—would naturally be noticed first. The builder coolly replied that the nomenclature could be changed to 'education' because 'we are educating the members on the advantages of entrusting us with the task of redevelopment'.
A Nepean Sea Road society has had several luncheon meetings and brunches with builders on Sundays because their society is on collector's land and no member is willing to pay the amounts for conversion of its status to free hold. The builder paying for these free lunches takes special efforts to convince them that he can get the conversion to free hold at no cost to members in minimum time.
In a Carmichael Road society, members did not want to join the neighbouring society for cluster redevelopment only because the neighbouring society plot was abutting Pedder Road and by going with them, the tag of Carmichael Road which fetches them premium selling price would be lost.
They needed to be convinced and services of top five-star hotels were availed of.
Veteran property expert Pranay Vakil said land prices in south Mumbai are so exorbitant that developers prefer the redevelopment route. 'Once you have convinced the society, the developer gets control of the land with high FSI and a substantial free sale area in upmarket localities,' he said.
So, when a single society redevelopment in a posh south Mumbai neighbourhood could be worth several hundred crores, a paid-for meal and presentation in a big hotel is no big deal for an A-list developer.
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