SC verdict on Mumbai private forest land boosts Oberoi Realty, Godrej Prop

Shares of real estate companies Godrej Properties and Oberoi Realty soared in trade today after the Supreme Court on Thursday quashed all prior notices and orders regarding encroached forest land in various areas bordering the sprawling Sanjay Gandhi National Park in Mumbai. The new ruling will open up hundreds of acres of private forest land in suburban Mumbai for development, paving the way for more than 100 real estate projects. Moreover, it will also bring relief to more than 5.5 lakh residents whose properties were listed as encroachments. [caption id=“attachment_506718” align=“alignleft” width=“380”]  Reuters[/caption] Shares of Oberoi Realty jumped 9 percent to Rs 217 in opening trade as the Supreme Court order will help free up the realty major’s Mulund project, which has been stuck for nine years over this issue. Oberoi Construction had bought a 19-acre plot belonging to the Glaxo-owned Burroughs Wellcome in Mulund for Rs 220 crore in 2005. The forest department order came soon after the sale and scuttled the builder’s plan to develop it. The land has been lying vacant ever since. The project, worth 3.3. million square feet, is likely to add Rs 5,000 crore to the company’s sales, CNBC-TV18 reported. According to Edelweiss Financial Services the SC verdict is a significant move as it means the launch will happen sooner than later. Morgan Stanley believes the project should contribute nearly Rs 1,200 crore on nearly Rs 39 per share to Oberoi’s net asset value (NAV). Another beneficiary is Godrej Properties. The stock is up 5.35 percent at Rs 163.50. “The 116-year-old conglomerate is perhaps the largest private landlord in Mumbai. It controls about 4,000 acres in Vikhroli, most of it a huge mangrove sprawl described by environmentalists as the best preserved in the state. It was here in Vikhroli that the late Pirojsha Godrej started amalgamating land purchased from a plethora of owners in the early 1940s. In recent years, the group’s main thrust has been in real estate,” _The T_ imes of India reported today. The Supreme Court  held that the state government cannot be allowed to demolish massive constructions made over the years by declaring the disputed land as a “private forest” after long and inordinate delay.  It further said it cannot put the clock back when the possession of the disputed land was not taken over or attempted to be taken over for decades and the issue was never raised when it should have been raised by the state. Other Mumbai-based developers like Runwal Group and  Nirmal Lifestyle whose projects  in Mulund and Thane  have been stuck for the past few years, can go ahead and sell their projects now.