Arkade says Mumbai redevelopment competition rose sharply

Arkade Developers Limited said Mumbai redevelopment competition increased drastically during the past 12-18 months, while citing around 15 projects completed and handed over over the past 15-20 years and five to six ongoing redevelopments as evidence of the execution record it uses in selective bidding.

Why does Arkade say Mumbai redevelopment competition has intensified?

Arkade said participation in Mumbai redevelopment has increased drastically in the past 12-18 months. Management said redevelopment had drawn substantial interest from developers based in Mumbai and outside the city during the past two to three years, in response to an investor question on aggressive business-development activity by competing developers.

Arkade did not disclose the number of competing bidders, tenders, bids submitted or projects lost. Its comments instead describe a more crowded market in which a developer's project selection, tendering process and bid execution affect whether a redevelopment proposal becomes an awarded project.

How does Arkade plan to compete for redevelopment projects?

Arkade said it plans to compete through its execution history and selective bidding. Management cited nearly four decades in business, around 15 redevelopment projects completed and handed over over the past 15-20 years, and five to six redevelopment projects currently under way.

The comparison between around 15 completed projects over 15-20 years and five to six ongoing projects shows that Arkade is presenting both prior delivery and a current development portfolio as credentials. Management did not provide a comparison of bid-win rates before and after the competition increase of the past 12-18 months.

Arkade said it evaluates redevelopment opportunities on location, size, development potential, project revenue and gross development value, or GDV. Once it selects a project, management said it seeks to pursue the tendering and bidding process fully, while acknowledging that greater participation has made the market more competitive.

Which western-suburbs redevelopment projects are in Arkade's pipeline?

Arkade identified three society redevelopment projects in Kandivali West, Borivali West and Malad West. Management said the projects together span 11 acres and carry potential GDV of around Rs 5,000 crore, concentrating these identified redevelopment opportunities in Mumbai's western suburbs.

Arkade has not disclosed launch or completion dates for the three projects. Management said it has been appointed preferred developer and is moving towards completion of the development-agreement process with the societies, after which it expects to be able to provide a timeline.

The Rs 5,000 crore amount is potential GDV rather than reported revenue, sales or cash flow. Management also said Yogi Nagar falls within the set of four developments being progressed, but did not provide an individual project value or separate timetable for it.

What is the status of Arkade's other Mumbai market evaluations?

Arkade said it remains in discussions on a South Mumbai redevelopment proposal, where management said the society was finalising its top two or three developers. The society was expected to proceed with formalities and voting in a process management called 79A, and Arkade said it was positive about its position.

Arkade did not disclose the South Mumbai proposal's GDV, size, product details or launch date because management described it as being at a nascent stage. This differs from the Kandivali West, Borivali West and Malad West projects, for which Arkade gave a combined 11-acre area and around Rs 5,000 crore of potential GDV.

Arkade said it is evaluating micro-markets in and around Mumbai, including Navi Mumbai. Management said it had assessed a couple of Navi Mumbai projects in the past that did not proceed and was evaluating a few additional proposals, without identifying their values, locations or potential closing dates.

Arkade also said it was exploring proposals in South Mumbai and North Mumbai. Separately, management described an upcoming portfolio with potential GDV of around Rs 19,000 crore that it plans to launch over the next four to five years, while noting that some projects could take longer.

That wider portfolio includes a Thane project that management planned to launch in the next quarter, Filmistan planned for the next financial year, and a memorandum of understanding with a woollen-mills property in Bhandup. Management also said it was evaluating two other proposals and would disclose details through exchange notices when they become material.

Conclusion

Arkade's comments indicate that Mumbai redevelopment has become more contested during the past 12-18 months, rather than being an uncontested source of growth. Management's response is to cite around 15 completed redevelopment projects, five to six ongoing projects and selective screening, alongside three identified western-suburbs schemes with around Rs 5,000 crore of potential GDV across 11 acres.

The next matters to watch are completion of the development-agreement process for the western-suburbs projects and the society's 79A formalities for the South Mumbai proposal. Management also plans to launch its Thane project in the next quarter and Filmistan in the next financial year, within a wider around Rs 19,000 crore potential-GDV portfolio planned for launch over four to five years.