Turning around distressed assets in the Mumbai real estate sector seems to be the next big opportunity – Times of India

Mumbai the city of dreams and also the financial capital of India is the most populated metro city in the country. Mumbai boasts a population of 12.7 million, with a population density of 21,000 per square km. It is the top entertainment and financial destination and is left with hardly any vacant land spaces for real estate development. Considering the space constraint in Mumbai, there is no scope to grow horizontally and hence vertical is the only way to grow.

Mumbai is home to historic and very old constructions that are now showing signs of dilapidation withstanding the massive Mumbai monsoons for decades now. It is estimated that Mumbai has at least 33,000 housing societies that were developed in the 1960s, 1970s, and 1980s which are in dire need of redevelopment. Turning around distressed assets in the Mumbai Real Estate Sector seems to be the next big opportunity. 

Currently, there exists a huge gap between the project and customer expectations in the redevelopment scenario in Mumbai. The key is to identify the gap and meet customer expectations by value creation. Turning around a stressed property is advantageous for both the tenants and the developer.  The fast paced life of Mumbai leaves no time for self-care for many. Living in a property with amenities gives people the opportunity to live a well-rounded life.

A stressed property comes with its inherent challenges and with customers’ hopes.  A smart developer is the one who will promise what they can deliver within economic timelines. Generally for these projects, the gap is identified and corrected to meet customers’ expectations. Identifying a project who’s risk can be managed with ease and can be repositioned in the market for commercial value is process led function. 

Mumbai is home to a plethora of such opportunities. A calculated approach is the best bet to deliver a financially viable project. To scout for projects that are revivable one must bear the following points in mind:

Credible channel development: 

The channels via which the proposal for a turnaround project is received should be trustworthy. One has to ensure that the project they may undertake will be profitable for the developer and investors and simultaneously meet customer expectations by adding value to the project. The crucial element here is that the stressed property must be redeemable and the risks involved should be manageable. The initial appraisal of the property is a time and money consuming process and hence a tight-lined process must be followed. 

Legal Assessment:

Many times a property is stuck when it is marred by legal disputes.. The project must be assessed to understand the depth of legal disputes and our abilities to solve the problem for the benefit of the customers. It must be noted that legal disputes must be assessed strongly considering project and customers benefits for a successful progress of the project. The assessment must follow stringent analysis to drive solutions.

Inspection:  

Once the first step has been assessed, a detailed physical inspection is the next step for evaluating a stressed  project. It is critical to take a first-hand account of the property and premises. Firstly a detailed property report must be made for assessment. This report is essential to present the project to  investors and budgeting. 

Planning:

The turnaround process essentially fills the project gap and customer expectations. The project gap is identified and corrected to meet customer expectations and create more value. Financial requisites are carefully studied, planned and strictly monitored with the aim to successfully complete the project. 

Financial planning and cashflow management:

A turnaround project will be considered successful only when the project is scalable, and can generate revenue for  investors and the  developer. The property report will also act as an indicator of the probable success of the project. Arriving at a total property valuation and redevelopment cost, thereby safeguarding that one does not . 

Management: 

Once it is established that a stressed property can be turned around, the next step is to identify customer expectations, create value, devise a marketing strategy, and set deliverable time lines. The only way to instill faith in the customer is delivering what was promised within the pre decided timeline. Most construction projects fail to deliver the projects within promised timelines. This is one of the prime concerns of customer dissatisfaction. Customers are on-boarded and confidence instilled. Sales and marketing strategy is carefully planned and executed for new businesses. 

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 the around for customers benefits is where the opportunity lies which also makes good business sense.  

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