MUMBAI: This weekend, a prestigious luxury hotel in South Mumbai will host meetings for affluent residents of a prime housing society on Altamont Road, one of the most expensive residential areas in India. Three of Mumbai’s top developers will separately present their redevelopment proposals. The competition for these prime properties is expected to be fierce, as new apartments can demand prices exceeding Rs 1.5 lakh per square foot.
On Saturday, a notable developer from Goregaon has reserved a large banquet hall at the hotel. The following day, another major developer will host a lunch at an entire restaurant located on the hotel’s 19th floor. That afternoon, a third developer with a national presence will unveil its redevelopment strategy.
The demand for redevelopment in Mumbai has surged, with builders striving to attract housing societies in prestigious areas like Malabar Hill, Nepean Sea Road, Carmichael Road, and certain parts of Bandra. One prominent developer described the meetings in luxury hotels as a “vital business development strategy,” noting, “It is costly, but developers must present their vision in a comfortable setting.”
‘Luxury lunches are justifiable when projects are worth crores’
One developer who successfully secured redevelopment rights for a sea-facing Breach Candy society organized a final presentation for members over “drinks and dinner” at a five-star establishment in South Mumbai.
This developer justified the expense, asserting that the lunch could cost around Rs 5,000 per plate, with the total presentation costing between Rs 5 lakh to Rs 10 lakh. “The entire society is invited, ensuring there are no secret arrangements with a select few,” the developer, who wished to remain anonymous, added. “We simply need proper facilities like an LED screen, sound system, and adequate cooling for the presentation.”
In an intriguing incident recently, a senior executive from a venture capital firm was taken aback by the financial proposal submitted by a builder seeking debt financing for a redevelopment project. Funding needs are typically categorized into pre-Intimation of Disapproval (IOD) and post-IOD financing. Pre-IOD expenses generally involve payments for scrutiny fees to the BMC and NOCs from various departments, in addition to purchasing floor space index (FSI) and transfer of development rights (TDR).
However, there was a new budget category labeled “entertainment” that raised eyebrows due to its significant amount. Naturally, the executive tasked with approving these amounts had to examine each category, and the enormous figure for “entertainment” prompted further investigation. The builder stated that securing projects in upscale areas often necessitates hosting lunches and dinners at select five-star hotels for managing committee members to achieve the crucial 51%+ support for redevelopment.
The executive expressed concern about convincing the board of the justifiability of such substantial spending, noting that the “entertainment” category would draw immediate attention. The builder calmly suggested rebranding that category as “education,” claiming, “We are enlightening the members on the benefits of entrusting us with their redevelopment.”
A society on Nepean Sea Road has hosted multiple luncheon meetings and Sunday brunches with builders. Their society is situated on collector’s land, and members are resistant to paying for a conversion to freehold status. The builder, covering these complimentary meals, is making a concerted effort to demonstrate that he can facilitate this conversion at no cost to the members promptly.
Meanwhile, in a Carmichael Road society, members initially resisted joining a neighboring society for cluster redevelopment due to concerns about losing the value associated with their prime location. To convince them, the services of top five-star hotels were enlisted.
Veteran property expert Pranay Vakil remarked that the soaring land prices in South Mumbai incentivize developers to pursue redevelopment. “Once a society is convinced, the developer gains control of the land with high FSI and significant free sale potential in upscale neighborhoods,” he noted.
Given that a single society redevelopment in a posh South Mumbai area could be worth hundreds of crores, a catered meal and presentation at a luxury hotel is a trivial expense for a leading developer.
