Plotted real estate developer House of Abhinandan Lodha (HoABL) has announced its first three projects in the vertical developments space — a segment it had long planned to enter.
The projects include a commercial development on the site of the former American Center in Marine Lines, one residential project near Girgaon Chowpatty in south Mumbai, and an affordable-to-mid-priced development in Naigaon in the northern reaches of the Mumbai metropolitan area.
The Naigaon project is being developed as a joint development agreement with the landowners of the project site, Mittal Builders, under a revenue sharing model. The American Center and Girgaon Chowpatty projects will have a development potential of around 60,000 square feet and 50,000 square feet, respectively, while the Naigaon project will have a development potential of over 3 million square feet, including homes and high-street retail.
HoABL expects to generate revenue of around Rs 3,500 crore from the three projects, said its chairman Abhinandan Lodha, with the company planning to lease out the American Center office project. The launches are expected in the July to September quarter of the ongoing fiscal, with completion expected over a five-year period.
Ending the feud
Notably, the move towards vertical developments, in which HoABL is deploying around Rs 2,500 crore by way of investments, comes closely on the heels of Abhinandan's and his company's legal truce with Macrotech Developers, India's second-most valued real estate firm, helmed by Abhinandan's brother Abhishek.
Macrotech and Abhishek had sued Abhinandan's HoABL over what they alleged were "unauthorised" uses of the 'Lodha' brand, owned by Macrotech. Last week, both sides reached an out-of-court settlement, in which both agreed to stay out of each others' businesses and agreed to the respective ownerships of the 'Lodha' and HoABL brands. In the original family settlement agreed to by the brothers in 2017, Abhinandan was bound by a non-compete clause in the vertical development business for a five-year period in the Mumbai metropolitan area, which expired in 2022.
Abhinandan, however, said that the settlement or its timing had no bearing on the company announcing its much-speculated move into the vertical segment.
"We are announcing it now because we got our approvals three days ago... Business continues as usual. Family is family, and whatever happened inside the family has been done very well. It had no bearing on the business earlier, and it has no bearing on the business today," he said in an interaction with reporters.
The funding
Abhinandan added that the projects will be funded through sales, as well as internal accruals, including from sales in the company's plotted development business. Around 95 percent of HoABL's land bank is currently earmarked for plotted projects, including in Alibaug, Goa, Ayodhya, and other places, while Abhinandan conceded that the allocation can change in the next few years, depending on the growth of the vertical business.
He added that while the company has purchased both of the land parcels in its first two vertical projects in the south Mumbai market, it is "studying the economics" of the redevelopment model that is the predominant "asset-light" model of land sourcing for premium and luxury developments, both in the island city and the suburbs.
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