Surge In Joint Development Projects As Land Prices Soar, Real Estate News, ET RealEstate

June 26, 2023

AHMEDABAD: The real estate scene in the city is witnessing a surge in joint development deals, with two prominent developers partnering with landowner groups to launch new projects.

This trend is seen as a response to the significant rise in land prices over the past few years, making it challenging for developers to allocate substantial capital for land acquisition.

Collaborating with landowners through joint ventures offers a much-needed respite for developers, alleviating their financial burdens, particularly considering the higher jantri rates and the resulting expensive premium FSI charges.

In the past two months, following the implementation of the new jantri rates, two major developers have finalized joint development agreements with different landowner groups.

The Bakeri Group, for the first time, has opted for a joint development project with a landowner group, announcing plans for a residential project spanning approximately 5 lakh square feet in Shilaj.

Pavan Bakeri, managing director of Bakeri Group, explained, “Joint development primarily occurs when the plot boasts an excellent location, and it also mitigates financial risks.”

Similarly, the Shivalik Group has also concluded a joint development project at Vaishnodevi Circle.

Reliable sources reveal that the plot measures around 13,500 square yards, with the Shivalik Group aiming to develop a 30-storeyed commercial project encompassing approximately 10 lakh square feet of built-up space.

An office-bearer of Credai Ahmedabad said, “Land prices have seen a significant surge over the past decade, while the prices of finished properties have not increased proportionately. With the new jantri rates doubling the premium FSI charges, developers face a considerable burden in terms of land acquisition and FSI payments.

As a result, we anticipate an upsurge in joint development projects with various models. In many cases, the developer pays half the price of the land, and then both parties contribute equally to the construction costs. Alternatively, developers may provide a deposit for the land ranging from 5% to 30%, after which both partners collaborate on project development and revenue sharing. Joint development projects enable developers to avoid investing substantial capital in land, while landowners benefit from higher returns compared to simple land sales.”

  • Published On Jun 25, 2023 at 03:30 PM IST

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