The Next Significant Prospect In Mumbai's Real Estate Sector Appears To Be The Revitalization Of Distressed Assets

Ali Kochra, Chairman and Managing Director, Kochra Realty

Mumbai is the financial capital of India, boasting a population of 12.7 million and a population density of 21,000 per square km. With little vacant land space available, vertical growth is the only option for real estate development in the city.

There are over 33,000 housing societies in Mumbai that were developed in the 1960s, 1970s, and 1980s and are now in dire need of redevelopment. However, there is currently a gap between project and customer expectations in the redevelopment scenario in Mumbai. The key is to identify the gap and create value that meets customer expectations. This can be advantageous for both the tenants and the developer, especially as living in a property with amenities gives people the opportunity to live a well-rounded life.

Turning around a stressed property can be challenging, but it is also where the opportunity lies for developers in Mumbai. A smart developer will promise only what they can deliver within economic timelines, and the focus should be on identifying projects where risks can be managed with ease and the property can be repositioned in the market for commercial value.

To scout for revivable projects, developers should keep the following points in mind:

In order to successfully undertake a turnaround project, several key factors must be considered. Firstly, it is important to develop credible channels through which proposals for the project can be received, which are both trustworthy and profitable. The property must be redeemable and the risks involved in the project should be manageable. An initial appraisal of the property is necessary, but the process must be followed strictly to avoid any unnecessary time and money expenditure.

Secondly, legal assessments must be made to determine the extent of any legal disputes which could arise during the project. It is important to assess the developer's abilities to solve any issues which may arise for the benefit of the customers. Legal disputes must be evaluated strongly, considering the project and customer benefits, for the successful progress of the project.

Thirdly, a detailed physical inspection of the property is essential for evaluating a stressed project. A detailed property report must be created to provide essential assessment information for investors and budgeting purposes.

Fourthly, planning is critical to ensure that the turnaround process fills the projected gap and meets customer expectations. Financial requisites are carefully studied, planned, and strictly monitored with the sole aim of completing the project successfully.

Fifthly, financial planning, and cash flow management are key factors that must be considered. A successful turnaround project must be scalable and able to generate revenue for investors and the developer. The property report will act as an indicator of the project's probable success.

Finally, management is crucial for a successful turnaround project. Identifying customer expectations, creating value, devising a marketing strategy, and setting deliverable timelines are necessary. The only way to instill faith in the customer is to deliver what was promised within the pre-decided timeline. A carefully planned and executed sales and marketing strategy is key to new business success.

A turnaround project will only be successful when it adds value for the customer and creates profit for the developer and the investor alike. A planned approach towards acquiring a stressed property and successfully turning it around for customers' benefit is where the opportunity lies, and it makes good business sense. With the right approach and careful planning, the Mumbai real estate sector can provide a lucrative opportunity for developers looking to turn around distressed assets.

Written By : Ali Kochra, Chairman and Managing Director, Kochra Realty