Mumbai’s property landscape has been significantly altered of late with the entry of real estate giants into the distressed assets market. Thanks to distressed projects, real estate developers like Prestige Estates and Adani Realty, among others, have been able to gain a strong hold in Mumbai’s realty market despite not being native players.
According to market observers, sky-high land costs, regulatory hurdles and fluctuating economic headwinds have left many smaller and mid-sized developers struggling and their projects stalled. This opened the doors to players like Adani, Prestige and the like, who are parlaying the foothold into a stronger hold in the Mumbai Metropolitan Region (MMR). They said the projects that were once eyesores are slowly transforming into vibrant residential and commercial spaces. And for the developers, taking on stalled projects is less of a hassle than a greenfield project in a new market.
Bengaluru-based Prestige Estates is increasingly expanding its footprint in Mumbai. Lately, Prestige had bought out high-value land parcels from formerly stressed DB Realty (now Valor Estates), including at Mahalaxmi, Marine Lines and Bandra Kurla Complex. Prestige is setting up a range of premium to luxury residential and commercial real estate projects.
On its part, Adani Realty has prepared to bid for delayed and long-gestation projects by the Slum Rehabilitation Authority and Maharashtra Housing and Area Development Authority, such as the redevelopment of Dharavi and Motilal Nagar in Goregaon (West). Adani’s deep pockets and ability to navigate complex regulatory landscapes make them formidable players in reviving projects that have been languishing for years.
Adani Realty and Prestige Group are not alone in seeking value in distressed or delayed projects. Macrotech (Lodha Group) was involved in a high-profile corporate resolution for Juhu’s iconic Centaur Hotel, whose owners were dragged to insolvency proceedings at the National Company Law Tribunal.
For a total claim amount of Rs 2,500 crore, creditors took a significant haircut to approve Lodha’s proposal for Rs 890 crore to acquire the property, and pay off creditors. Macrotech is now setting up a luxury residential project at the site.
What attracts developers to distressed projects
Industry experts say that multiple factors, from a value proposition, new generations of sellers and bankers, to newer hiring practices by corporate real estate firms, are drawing firms to stressed or delayed projects.
“We are seeing that new generations of developers and property owners are warming up to the prospect of corporate developers, because they trust the firms to develop and deliver projects on time, which helps them recoup their investment or recover a significant portion of it. Besides, corporate developers are gaining the bandwidth to handle stressed or delayed development projects, be it projects out of the IBC process, or government projects,” said a real estate consultant based in Mumbai.
Market observers said that many experienced business development and government liaison professionals have joined large developers like Adani, Prestige and Lodha, and they are bringing the projects as well as the execution capabilities with them.
“Bankers and NBFCs are also increasingly trusting large developers for real estate projects referred towards IBC resolution, due to their resolution and financial solvency,” another real estate expert said.
Distressed redevelopment projects
Despite the redevelopment boom in Mumbai, lack of viability in some micro markets, and liquidity issues among developers, have often caused projects to be stalled for years, often decades. These are now being snapped up by developers who have adopted project turnarounds as their primary proficiency. For instance, In 2023, Kochra Realty, a family-held developer, took over a stalled redevelopment project from Ashapura Housing in Mumbai’s Dahisar suburb, which had nearly 600 homeowners waiting for their homes for a number of years.
Experts said that Mumbai’s real estate market, while still expensive, is seeing a fresh wave of supply, albeit often in the premium segment, but also including revived distressed assets.
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