After a long period of waiting for the required permission for its Lutyens' Delhi luxury residential project, which was put on hold, Prestige Group from Bangalore has decided to give up the project and thus move away from one of the most tightly regulated residential zones of the capital.
The developer has sold the bungalow on Kasturba Gandhi Marg for close to ₹450 crore, nearly two years after buying it for around ₹300 crore. The new owner is a business person whose areas of industry are Jharkhand and Kolkata. With this deal, Prestige has exited the ultra-luxury housing sector in central Lutyens' Delhi after a short stay.
The property belonged to TDI Infratech and was at first planned as a joint development project. However, Prestige later took over the property completely and made plans to turn the 5,100-square-yard land into a high-end residential project. The project was estimated to generate revenues of nearly ₹700 crore and was positioned as Prestige Group's entry into Delhi residential market.
According to real estate insiders, the developer intended to build eight to nine luxury apartments, each costing more than ₹70 crore. The concept of the project was a low-density luxury development, which is in line with the nature of Lutyens’ Delhi that is characterized by strict development norms, heritage guidelines, and limited permissions for redevelopment.
However, the project faced regulatory hurdles. Approval in Lutyens’ Delhi is known to take a long time because of various layers of scrutiny such as heritage conservation rules, height restrictions, and planning controls. People knowledgeable about the matter said these issues made it very hard for Prestige to move forward and at the same time keep to the schedule.
“The group tried hard to get the project executed but it is a well-known fact that approvals in Lutyens’ Delhi take a long time and are complicated. Considering the limitations, Prestige has opted to move its focus to other NCR areas where it is possible to carry out projects more quickly,” stated a person familiar with the deal, as per ET Times.
Moreover, the Kasturba Gandhi Marg property had an outstanding loan of around ₹225 crore, which has now been completely paid off by the Prestige Group as part of the exit.
The developer is moving his attention to the large metropolitan area of the National Capital Region, where he has been extending his residential network, step by step. Prestige has recently delivered its first residential project in the NCR area in Ghaziabad and is energetically scouting for opportunities in Noida and Gurgaon. Along with that, the company is finishing the last phases of an agreement to purchase a five-acre land parcel in Gurgaon, which is the idea to build a huge luxurious housing project.
Lutyens’ Delhi is still one of the most luxurious residential areas in India and is home to top politicians, diplomats, and prominent business families. Although the value of land in the area is among the highest in the country, redevelopment is still very difficult due to strict regulations and the limited scope for new construction.
Prestige Group’s departure throws light on the actual challenges that developers have to face in the execution of luxury housing projects in central Delhi despite the demand being strong and the ticket sizes being high. At present, the developer seems to be favouring the NCR markets on the periphery vis-à-vis central locations in the sense of scale, certainty of execution and rather than prestige but heavy with approvals.
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