Horizon Projects, part of the Mumbai-based real estate developer Runwal Group, has entered into an agreement with Premier (formerly Premier Automobiles, makers of Premier Padmini cars) for developing the latter’s 150 acre land for an affordable or middle income housing project in the suburban area of Dombivali in Mumbai.
As per the deal, Premier has received R220 crore as part consideration for this transaction, it said in a BSE filing on Wednesday. In addition, the company will also receive built-up flats aggregating to 5 lakh square feet in the said project, with an option to swap this area for a cash payout, if it decides so, in the next two years.
Sources in Premier told FE, the flats will not be for captive consumption by Premier, nor is it looking to sell them on its own in the market. So, in all probability, it would opt for a cash payout, depending on the prices two years from now.
The land parcel sold to Runwal is part of Premier’s 218 acre land in Dombivali. Sources in Premier said the remaining 68 acre land will continue to be with the company and it will look at capitalising it at a later date.
Speaking to FE, Sandeep Runwal, director of Runwal Group, said: “We are looking at a township development which will have all components of integrated development.” Runwal did not give more details of the development, saying it was too early to comment.
According to industry experts, Dombivali has an oversupply situation at the moment.
Market estimates suggest that around 6,000 to 10,000 apartments are coming up just between two developers in that area — Lodha and Dosti. The prices in the suburban area are ranging between R 2,500 and R4,500 per square feet depending on the developer.
Om Ahuja, chief executive officer (residential), Jones Lang LaSalle India said: “A lot of supply is coming into Dombivali, but there is no proper infrastructure development in the area. Also, if you look at capital values, there is appreciation only on paper, actual exits look tough.”
However, there are differing opinions, “Dombivali is often seen as a far flung suburb of Mumbai but that is not the case because of good connectivity through railways to that area. Real estate development is also going on in the area. A number of IT/ITeS companies and back-end offices of banking and financial services are expected to come up in the