Honest Shelters strikes agreement to buy Worli's iconic Palais Royale

Last Friday, Honest Shelters, a little-known company from Pune with paid-up share capital of Rs 1 lakh, struck an agreement to pony up  Rs 705 crore as earnest (consideration) money to buy the iconic Worli skyscraper Palais Royale that went up on auction from realty firm Indiabulls Housing Finance (IHFL), said sources privy to the deal.  

IHFL had put the incomplete building up on auction earlier as well, with an initial price of Rs 995 crore in order to recover funds that had been loaned to the Vikas Kasliwal-led Shree Ram Urban Infrastructure, which had started to develop the building again in recent years.

Honest Shelters, which was registered in Pune just four years ago, lists Sunil Girdharilal Mittal and Dilipkumar Dwarkaprasad Mittal as directors. Both Mittals are also directors on other real estate companies that include Mittal Mega Projects, New Unicorn Infraventures, Deccan Plateau Projects, Mittal Brothers, Palash Realtors, UD Developers, and others. Calls and emails to the Mittals went unreturned.

After one failed bid to auction the iconic Palais Royale building in Worli, IHFL  announced fresh plans to auction it at a reduced price, hoping to recover around Rs 995 crore from the owners, the S Kumars fame industrialist Vikas Kasliwal. It was once billed India’s tallest and among the city’s fanciest residential towers being built with 144 expansive luxury apartments. 

The building, according to those who helped design it, was the first highrise tower with an atrium at construction time — the first pre-certified platinum-rated green building. 

Palais Royale was designed to accommodate immediate occupation following any earthquake in the city of Mumbai, shielded against radiation emanating from radio frequency towers, and designed to have the fastest high-speed elevators in the country at the time. 

Palais Royale remained stuck for the better part of a decade amid complaints of floor space index laws being breached to public interest litigation cases that were filed by non-governmental organisations.

Hammered by lawsuits and a cash crunch to finish construction, the building was mothballed in 2013, before getting clearances to start work again in 2016. When contacted, Vikas Kasliwal declined to comment. 

When contacted, IHFL officials declined to comment, stating the building is also involved in matters that are sub-judice.  Those familiar with the deal say the deal is closed for all practical purposes and it’s now a matter of the authorities accepting the bid made by Honest Shelters, and legal diligence being carried out by IHFL. 

Even so, it’s unusual for a developer to be able to make the journey to buy such an asset in the current real estate climate. 

Ramesh Nair, country head of JLL India, says that most real estate developers are strapped for cash in the current environment. “The credit-crunch being witnessed currently is worse than what was witnessed in 2008 after the global financial crisis. There is almost no recovery, with most banks, mutual funds, and non-banking financial companies reducing their real estate exposure significantly,” said Nair, adding, “The other bigger worry is moratorium expiries of many deals done in 2018.”

For the new owners of the property, the upfront payment will not be the end of their spending.  Gulam Zia, executive director with property management company Knight Frank India, notes that for Palais Royale specifically, there are continuing permissions for the building, which need to be negotiated and green-lighted and there’s a possibility that the structure may legally call for certain portions to be demolished and subject to other structural changes. That’s not necessarily good news for the several owners who have been waiting for their flats to be delivered for the past few years. 

One buyer, who bought two flats in Palais Royale and has been waiting for delivery since 2006, says, “I hear that 100 per cent of the purchase price has been paid by a party from Pune and due diligence has already been done,” he said, adding, “I am sure that people who have bought the tower will be able to navigate through the issues surrounding the building.”

The owner, who declined to be named, said he hoped the project finally sees the light of day.