Mumbai: Realty developer DB Realty is in advanced talks with Rustomjee Group to enter into a Development Management Agreement (DMA) to execute its residential project ‘DB Crown’ spread over 7 acres in Mumbai’s Prabhadevi locality, said two persons familiar with the development.
The agreement for the project, with estimated revenue potential of ₹5,000 crore, will be a tripartite pact, given that DB Realty itself had entered into an agreement with Thackersey family and Bhishma Realty, erstwhile owners of this mill land. This is DB Realty’s fourth monetisation pact after forming joint development agreements for its projects in Bandra, south Mumbai’s Mahalaxmi and Marine Lines localities.
“It’s almost done, as the agreement between Rustomjee and DB Realty was expected to be entered into on February 16. But some more documentation work had to be finished and once done, the agreement can be signed anytime soon,” said one of the persons mentioned above.
Following this agreement, Rustomjee will be responsible for the rest of the permissions, construction, and marketing of this project with nearly 1.8 million sq ft saleable area. The project has already received crucial approvals including height clearance, while future concurrent approvals will be Rustomjee Group’s responsibility. ET’s separate email queries to both DB Realty and Rustomjee Group remained unanswered till the time of going to press.
DB Realty had entered into a development agreement with erstwhile mill land owners in 2009 and had started the work after that. The developer had also sold around 25% of the project that included three nearly 70-storey towers, making it one of the tallest structures in the city, with over 700 apartments in total. However, since then, only 30% of the project work has been completed, and the new developer is expected to execute the remaining part.
While the project layout and plan is not expected to be changed, there is a possibility of influence in the design of the structures,” said the second person.
The new developer Rustomjee Group is expected to receive a part of sales realization as part of its consideration, but the exact percentage of this revenue share could not be ascertained. The project is likely to be co-branded, but both the parties are still to take a call on this matter. Rustomjee Group is likely to finish the project over the next three years after the conclusion of the agreement.
In the backdrop of exorbitant land prices, several realty developers are keen to get into joint development agreements, joint ventures and development management agreements in most property markets including Mumbai, National Capital Region, Pune and Bengaluru. The developer enters into a pact with the landlord to jointly develop land parcels in exchange for an upfront payment, or a share in revenue of the constructed space in the completed project making it a win-win situatioan for both.