Points to Remember Before Choosing a Real Estate Developer For Redevelopment

There is no doubt that it is essential to appoint a real estate developer with a long-term perspective for society redevelopment.

Redevelopment of a tenanted building or housing society is a distinct endeavour in which 95% of the groundwork must be completed prior to the commencement of the 27 to 39-month voyage. Prior to the ratification of the development agreement, landlords/tenants/society members must demonstrate initial concentration and cooperation.

In addition, it is difficult to purchase a home in Mumbai, and it is not uncommon for two generations to spend their entire lives in the same home as part of a loving joint family. People's homes are imbued with sentimental value, and appointing the incorrect developer typically results in a fatal decision that cannot be reversed. Similarly, the right developer can result in a win-win situation, and post-redevelopment can result in a vastly improved quality of life, increased asset value, a clear title, and a modern, well-designed home that is suitable for the next 70-75 years.

When selecting a real estate developer for redevelopment, the following must be prioritised:

1. The developer has to be well-funded:

Selling and constructing dont work as the construction industry is highly capital-intensive now.  The new paradigm is to construct first and then sell. After sales occur, funds will trickle in gradually. Thus, feeble actors who enter the real estate industry frequently fail within 12 to 18 months of a project's inception, abandoning it in the middle of its development. Some constructors accept multiple projects without giving adequate consideration to cash flow, and as a result, they are unable to continue with these multiple projects, leading to an execution crisis.

2. Morality and history

This topic requires a great deal of research, and frequently, developers alter their personas by rebranding their businesses.Compliance and regulatory processes must be respected. In an era of RERA, GST online, DCPR, etc., the old methods of conducting business are obsolete, and defiant developers will not be able to survive.

3. Strong Core Team

Core team of the developer Contractors, Design Architects, PMC, MEP Consultants, Liaisoning Architects, Auditors, Legal Advisors, etc. are integral to the project. Before signing a Development Agreement (DA) with the developer, it is essential to give the foregoing consideration and to have a comprehensive understanding of the same.

It would be advantageous for the society to hire a contractor with an interest in "Green" construction and a commitment to sustainability.

4. Selection of a lawyer or senior advocates

Members must appoint reputable legal counsel to defend their interests from the beginning to the end of the project, and a document that is plainly drafted will reduce the likelihood of litigation and adequately empower the members.

The capacity of real estate developers to meet project milestones and secure an Occupancy Certificate (OC).  It is essential that the contractor has a genuine interest in the project, meets deadlines, and takes full OC seriously. Flats without OC have a steeply discounted value, attract few purchasers, and have a low leverage ratio for mortgage/loan facilities, etc.

Redevelopment is a difficult endeavour that requires a great deal of perseverance, concentration, and financial resiliency from the developer. 

Therefore, it is crucial for members to work with a developer who has a long-term perspective on the real estate industry, places the utmost value on goodwill, and is meticulous about design, quality, and execution. Recent online initiatives by the BMC make processes significantly more efficient, and with RERA, projects can be closely monitored in a significantly more effective manner.

Redevelopment with amenities such as amphitheatres, seat-out lobbies, gymnasiums, walking tracks, cafeterias, children's play areas, and plunge pools, among others, have become great enablers for gated community living and act as a catalyst for a change in lifestyle.