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Corporate May 8, 2011

Godrej move on Mumbai redevelopment is welcome

By Kelkar

Adi Godrej is one of the most measured business personalities. Hence, when he said some years ago that real estate will be Godrej Group's biggest business, it made people sit up and take notice. Here is a group that for more than a century created a trust brand that made soaps, locks, typewriters to everything that we consumed. Godrej Properties doubled its revenue over the past one year and gross profit margins are close to 40 percent of revenue, Adi Godrej says in an interview.

Adi Godrej's plan for redevelopment in Mumbai is a welcome move. AFP

The redevelopment market in Mumbai is something real estate players have bet on for a long time. It has been controversial in some places in Mumbai as inhabitants and slum-dwellers have protested and even stalled projects. Globally, development has caused displacement of people. In India, this issue is a burning one and has made people take up the cause through agitations that at times have turned violent. On Saturday, farmers held hostages against a development project in Uttar Pradesh.

Often, existing owners in housing societies that have to be redeveloped raise issues of credibility of the redeveloper.

In that context, Godrej Properties' move to set up a special purpose vehicle (SPV) for redevelopment projects in Mumbai is a welcome move. Credible project developers will be able to reassure existing inhabitants and eventually change the landscape of the city.

Those in the business of redevelopment can also take note of the fact that 'development' could be a double-edged sword if it causes displacement. A book by authors Peter Penz, Jay Drydyk and Pablo S Bose and published by Cambridge University that examines displacement and personal deprivation in the context of "development" is worth a read.

by Kelkar

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