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Business Today, March 17, 2013 – REDEVELOPMENT: RISING FROM THE RUBBLE

March 7, 2013

In a highly fragmented market, Rohan Lifescapes, Orbit Corporation, RNA Corp, Kalpataru Group, Rustomjee Group, SD Corp, and Wadhwa Group are the main companies focusing on projects that involve demolishing buildings constructed as early as 1940s to build high-rise apartments.

“Redevelopment enables access to land in prime markets without huge upfront investment,” says Anubhav Aggarwal, Managing Director of RNA Corp, which has executed 75 projects so far. The developers’ main expense when they start a project is compensation to homeowners for relocating during the construction period. This amount is sometimes as high as Rs 1 crore per family, depending on the size of the apartment, locality, and time taken for construction. The sale of additional flats at market prices helps the builders earn a profit on their investment.

RNA’s Aggarwal explains the problems builders face with an example. The company was executing a project in Subash Nagar locality near Chembur. The project comprised 55 buildings spread over 40 acres.

Aggarwal says the company had to negotiate with housing societies of each building and get consent of more than 70 per cent tenants in each building to qualify. Dinesh J. Kuwadia, the founder chairman of Happy Homes, agrees. “Convincing homeowners is a difficult task as it’s about their homes and what they want them to be.”

Business Today Mar 17 2013

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