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Shapoorji Pallonji buys 20 acres from BPTP in Delhi

LiveMint logoLiveMint 25-09-2017 Bidya Sapam

Mumbai/Bengaluru: Shapoorji Pallonji Real Estate, part of the Shapoorji Pallonji Group, has bought 20 acres near Dwarka Expressway in New Delhi from builder BPTP Ltd, to build a 2 million sq. ft affordable housing project, said three people familiar with the development said.

BPTP is trying to settle all dues to foreign investors JP Morgan Chase and Co. and Apollo Global Management LLC by March 2018 and will use the money from this sale to pay off the last tranche.

Though the deal size is not known, land brokers estimate the value of this transaction to be over Rs150 crore. This is the second land parcel that Gurugram-based BPTP has sold as part of its larger land monetization strategy. Earlier this year, it sold 14.8 acres along Dwarka Expressway to Godrej Properties Ltd.

BPTP chairman and managing director Kabul Chawla had told Mint in July that the sale of both these land parcels would help BPTP raise around Rs500 crore.

“Shapoorji Pallonji will build affordable homes under its Joyville brand on the parcel. The residential project will be about 2 million sq. ft in size,” said one of the three people mentioned above, all of whom spoke on condition of anonymity. The project is expected to cost over Rs800 crore and would be funded by a consortium of global investors which Shapoorji Pallonji had tied up with last year to build affordable homes across the country, said the second person mentioned above.

Earlier last year, the Mumbai-based developer joined hands with Standard Chartered Private Equity, International Finance Corporation (IFC)—an arm of the World Bank—and the Asian Development Bank (ADB) for investing in the segment. The partnership will invest about $250 million to buy land, meet project approvals and develop infrastructure for the projects.

Both BPTP and Shapoorji Pallonji declined to comment.

Shapoorji Pallonji Real Estate, the housing development unit of the group, plans to invest Rs600 crore on buying land parcels this year to build a pipeline of projects, Mint reported on 20 June. These land parcels are in National Capital Region (NCR), Hyderabad, and Bengaluru. It is also planning to launch a project at Hinjewadi in Pune by the end of the year.

BPTP raised over $250 million from a clutch of investors who bought stake in the company during 2006-08. Most of the funds (from the land sales) would be used for giving its investors an exit, Chawla had said in the interview, while some of it will be used for its projects in Gurgaon and Faridabad.

The last two years have seen developers in NCR increasingly looking to monetise land either to reduce debt or complete their ongoing projects. In addition, the prolonged slump in real estate has forced builders to tie up with land owners and jointly develop projects.

“A few years back, a lot of developers in the region had acquired large land banks at a reasonable price. With huge projects coming up and also lot of debt piled up, the only option left for them is to sell their land parcels and use that money for completion of new projects and also reduction of the debt,” said Akash Bansal, national head, consulting at Liases Foras, a property advisory firm.

Besides, as sales are slow, most builders are looking to tie up with branded developers for joint development in a bid to improve sales, he added.

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