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indian hume pipe: Kalpataru, Indian Hume Pipe in JV for 2.3-mn-sq-ft project on 15-acre Pune plot

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Realty developer Kalpataru has concluded a revenue-share agreement with Indian Hume Pipe Company to develop an over 2.3 million sq ft mixed-use project on a nearly 15-acre land parcel in Pune’s Vadgaon locality.

The company is planning to invest around Rs 1,000 crore in this project to be developed in two phases over the next 6-7 years.

The developer’s subsidiary Kalpataru Gardens had earlier signed a memorandum of agreement for this development. The pact has now been revised and the developer’s revenue share in the project is now increased to 67.50% from 66%, while Indian Hume Pipe Company will get the balance share.

Around 90% of the project will be premium residential development and the remaining part will be commercial. Based on the current property rates in the vicinity, the project is estimated to fetch total revenue of Rs 2,500 crore, of which nearly Rs 1,700 crore will be Kalpataru’s share.

The change in revenue share was necessitated due to abnormal increase in development costs, change in development rules and enhancement in the size of the project from the time of signing of the earlier pact, the Indian Hume Pipe Company said in a regulatory filing.

The agreement between Kalpataru and Indian Hume Pipe Company was registered on May 22 and has attracted stamp duty worth Rs 10.63 crore. The developer has paid an interest-free security deposit of Rs 11 crore to the Indian Hume Pipe Company, showed the documents accessed through CRE Matrix.As per the terms of the agreement, Kalpataru will obtain applicable approvals and permissions, construction execution and sales, while the land owner will be responsible for all costs related to providing floor space index (FSI) and conversion of land from industrial to residential use.In one of the largest single investments in the residential sector, HDFC Capital, a subsidiary of India’s largest private sector mortgage lender HDFC, recently invested Rs 1,450 crore in Kalpataru’s portfolio of projects and land parcels. The transaction for the Indian Hume Pipe Co’s land parcel in Pune is a new deal and will not be part of the HDFC Capital funding.

Transactions for land parcels have started to gather momentum again with many deals including outright acquisitions and joint ventures in key property markets of Mumbai, Pune, Chennai, Hyderabad and Bengaluru either being closed or expected to close soon.

The increased demand for land parcels is led by sustained recovery in the housing market and buoyed warehousing and data centres space.

Over the past few years, several realty developers have reworked their business strategies to focus on asset-light models, such as joint development and development management agreements.

Realty developers have acquired around 2,181 acres of land valued at over Rs 26,000 crore in the last 17 months between January 2022 and May 2023 with an estimated development potential of around 209 million sq ft across 104 separate land deals, showed data from JLL India.

Around 578 acres or 27% of the land, out of these 2,181 acres, was acquired in the first five months of 2023 alone. The data indicates that branded developers have successfully concluded many land transactions in top metros as well as tier 2 and 3 cities.

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