Bengaluru, NFAPost: At a time when the Indian real estate market is projected to witness growth despite the global slowdown, Meraqi, a leading real estate research, advisory and transaction firm, announces the launch of the comprehensive and up-to-date ‘Landowner’s Guide for a Joint Development Agreement for Residential and Commercial Projects in Bengaluru’. The Guide aims to provide solutions to real estate players operating in the city to tap growth amid soaring land prices.
Land prices in Bengaluru, a top real estate market in India, along with Mumbai, National Capital Region (NCR), Pune, Chennai, Ahmedabad, Kolkata and Hyderabad, have skyrocketed in the past 3years – In Bengaluru, land prices have increased 20 to 30 per cent in the past 3 years. This steep rise is primarily driven by the large number of IT companies and start-ups as well as continuous infrastructure development, leading to robust growth opportunities for real estate firms.
The rapid reduction of inventory overhang in the city’s residential market is an apt indicator: Instead of a healthy ~15 months, Bengaluru witnessed an overhang period of as low as 9 months in 2023, against 20 to 25 months in 2015-2020. In comparison, other top Indian markets in 2023 witnessed an overhang between 9 and 12 months. The rapid uptake of projects has spiked residential market prices by almost 30% compared to the end of 2020, resulting in a 10% average annual appreciation in Bangalore.
Referring to the assistance real estate players, including landowners and development firms, may need, and opportunities offered by JDAs to navigate the present landscape, Mr. Gorakh Jhunjhunwala, Managing Director, Meraqi, says, “Joint Development Agreements are pivotal to the growth of the real estate sector in India, and our guide contributes significantly to this trend. Our Landowner’s Guide is a strategic compass, providing essential knowledge for navigating the shifting trends in Bengaluru’s real estate market, with landowners increasingly opting for JDAs as well as development management models. This Guide is a testament to Meraqi’s commitment to providing insights to stakeholders in an immensely rewarding but highly competitive real estate market in India. It addresses the specific nuances of the city’s real estate market, catering to the surge in demand for JDAs driven by escalating land prices. As Bengaluru continues to be a focal point for real estate developments, this guide is poised to become essential for top global business executives navigating strategic land monetization.”
Joint Development Agreement (JDA), a popular method of contractual arrangement between a landowner and a developer to jointly develop a real estate project, has emerged as a win-win solution for both parties to beat the rising land costs – JDAs allow landowners to monetize their land without losing ownership rights, and developers to access prime locations without huge upfront costs. An estimated 70 per cent of real estate assets across residential and commercial segments in the city have been developed through JDAs.
Before 2021, outright sale transactions were favoured for land monetization. Miss Dhara Shah, Head – Land Services & Research, Meraqi says currently, many Bengaluru landowners prefer JDAs for residential and commercial projects owing to optimistic market & economic sentiments. JDA transaction is likely to yield 2 to 2.5 times higher returns than an outright transaction.
The period between 2015 – 2020 witnessed a lot of changes on the regulatory front – the introduction of RERA and the GST regime. During this phase, a few landowners struggled in JDA partnerships due lack of clarity on the newer regime and a lack of comprehensive understanding of all the aspects – tax, legal, and regulations.
The Guide is a valuable resource for landowners contemplating land monetization. It provides insights into land monetization strategies, JDA structuring, parameters for selecting developer partners, RERA compliance, accounting for landowners, market norms for negotiation, and an analysis of tax implications (Capital Gain & GST) on JDA transactions.
About Meraqi Advisors:
Meraqi Advisors is a strategic real estate solutions firm. They enable property owners & investors to enhance the value of their real estate assets. The company apply extensive expertise and deep understanding of real estate and allied business enablers. Their expert team develops appropriate strategies, arranges resources for implementation and tracks the implementation process across the lifecycle of the assignment. For investors, owners, and developers alike, they offer end-to-end real estate solutions in Advisory Services, Valuation, Due-diligence, Building Audit Services, Transaction Services, Capital Market and Land Advisory, Private Real Estate Investment Platform (yieldspace.com) and Research
Meraqi’s expertise extends across real estate asset classes including Residential, Commercial, Hospitality, Warehousing and Alternative Assets (Student Housing, Rental Housing and Senior Housing). The team has a collective experience of 100 years and has transacted over USD 100 Mn transactions in the land advisory in the last 5 years.
