Real estate developer Kalpataru and Indian Hume Pipe Company have agreed to a revenue-sharing arrangement for the development of a mixed-use project on a 15-acre tract of property in the Vadgaon neighborhood of Pune. The project is expected to generate Rs 2,500 crore in revenue overall, of which Kalpataru will receive about Rs 1,700 crore. Over the course of the next 6-7 years, the project will be built out in two phases, with premium residential development making up 90% of it and commercial development the remaining 10%. Additionally, HDFC Capital most recently contributed Rs 1,450 crore to Kalpataru's project and land portfolio.
Kalpataru, a real estate developer, has partnered with Indian Hume Pipe Company to undertake a mixed-use project in Pune's Vadgaon locality. The project will cover an expansive 15-acre plot and encompass over 2.3 million square feet of space. With an estimated investment of Rs 1,000 crore, the development will be carried out in two phases over the next 6-7 years.
Under the revised revenue-share agreement, Kalpataru's share in the project has been increased to 67.50% from the initial 66%, while Indian Hume Pipe Company will receive the remaining share. The project is primarily focused on premium residential development, which will constitute approximately 90% of the space, with the remaining portion dedicated to commercial use. It is anticipated that the project, considering current property rates in the vicinity, will generate a total revenue of Rs 2,500 crore, with Kalpataru's share amounting to around Rs 1,700 crore.
The adjustment in revenue share was necessitated due to rising development costs, changes in development regulations, and an expansion in the project's size since the signing of the initial agreement, as stated by Indian Hume Pipe Company in a regulatory filing. The agreement between Kalpataru and Indian Hume Pipe Company was officially registered on May 22 and attracted stamp duty worth Rs 10.63 crore. As part of the agreement, Kalpataru has provided an interest-free security deposit of Rs 11 crore to Indian Hume Pipe Company.
According to the terms of the agreement, Kalpataru will be responsible for obtaining the necessary approvals, executing the construction and sales, while the landowner will bear the costs related to providing floor space index (FSI) and converting the land from industrial to residential use.
In a significant investment in the residential sector, HDFC Capital, a subsidiary of HDFC (India's largest private sector mortgage lender), recently invested Rs 1,450 crore in Kalpataru's portfolio of projects and land parcels. However, the transaction for the Pune land parcel with Indian Hume Pipe Company is separate from the HDFC Capital funding.
The real estate market has witnessed a resurgence in transactions involving land parcels, including outright acquisitions and joint ventures, in key cities such as Mumbai, Pune, Chennai, Hyderabad, and Bengaluru. This increased demand for land can be attributed to the recovery in the housing market and the growing need for warehousing and data center spaces.
In recent years, many real estate developers have shifted their business strategies to asset-light models, focusing on joint development and development management agreements. Between January 2022 and May 2023, developers have acquired approximately 2,181 acres of land valued at over Rs 26,000 crore, with a potential development area of around 209 million square feet. Notably, 578 acres were acquired in the first five months of 2023 alone. This data indicates that established developers have successfully concluded numerous land transactions in major metropolitan areas as well as tier 2 and 3 cities.
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