Max Estates Limited has made its foray into the residential real estate segment in Delhi with the acquisition of about 84.71 acres of land in West Delhi through a non-cash share exchange, says the company in its investor announcement on August 28, 2015.
It will acquire a 100% stake in the nine land-owning companies, and the companies will become the wholly owned subsidiaries of Max Estates. The consideration for the same would be given totally in the form of preferential allotment of about 70 lakh.
It is fully paid equity shares having a face value of Rs 10 each, valued at Rs 597.50 per share. The total consideration would be approximately Rs 420.2 crore, and there would not be any need for cash outflow.
The valuation of land by the company would be Rs 4.95 crore per acre, whereas the cost of the land acquired by the company would be below 5% of GDV of the property, against 20-25% for cash land acquisition.
The development is expected to have 4-6 million sq ft of developable area with a ratio of 2.0x, and the indicative cost of land would be nearly Rs 1,000 per saleable sq ft. The potential Gross Development Value (GDV) of the project is estimated at Rs 10,000 – 12,000 crores.
According to Max Estates, the land has capacity for phased developments over the next few years, including residential, retail, and social and community infrastructure. It has a current pipeline of Rs 16,150 crore GDV as of Q2FY27, of which it is residential.
The land has the benefit of being adjacent to UER-II, Delhi Metro, Dwarka, Gurgaon Border & IGI Airport. The UER-II rail line runs from Alipur, Mahipalpur, to Mundka, Bakkarwala, Najafgarh & Dwarka.
West Delhi is an established residential area that is well connected to all the roads and other facilities like markets, educational institutions, hospitals, etc. It would be very useful for future development projects, which would attract both buyers and investors.
The developer will be embarking on a mixed-use integrated development project that includes both residential and retail development in addition to social infrastructure.
The deal will increase the landbank of Max Estates and boost their future income stream without involving any monetary transactions. The company has developed a strong reputation for providing quality projects, focusing on health, sustainability, and being client-centred.
The company has successfully demonstrated its ability to deliver unique places to live through its projects like Max Estate 59, Max Antara, Max Estate 361, Estate 360, and even the partnership with Antara Senior Living. This West Delhi project is no exception.
Max Estates entry into the residential market of Delhi may help homebuyers find better options of contemporary homes in the city. Its purchase of a land plot of 84.71 acres in West Delhi would give it a good piece of land for developing its residential project.
Delhi homebuyers will be provided with more alternatives in terms of apartment designs, sizes and facilities, along with some lifestyle elements. It is developed by a reputed real estate developer. This is a landmark transaction for this developer," Sahil Vachani, Vice Chairman and Managing Director of Max Estates, said about the acquisition.
He added that the plot is strategically located in an area which is vital for the development of Delhi towards the west side as per the Master Plan 2047. The location has enormous potential in respect of land pooling and great connectivity with UER-II, Dwarka, and IGI Airport.
Max Estates has entered the residential sector of Delhi by acquiring an 84.71-acre land asset located in West Delhi. With this acquisition, the company gains access to a sizable land holding that can be developed into a large residential development.
It will definitely help increase the presence of Max Estates in the market of Delhi and aid its future growth. The fact that they have access to such a large land property gives them a chance to make use of the demand for residential properties in West Delhi.
The financial implications include:
It is quite a big leap that Max Estates has taken by opting to enter into the residential real estate segment of Delhi through the acquisition of the 84.71-acre land plot in West Delhi.
This big piece of land will definitely give an option to making a huge residential complex in a highly reputable part of the city. Given the huge requirement of good houses in Delhi, the project can be very profitable for Max Estates. The deal will add to the list of developments that Max Estates has already undertaken.
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