Realty deals crumble under cash crunch

Realty deals crumble under cash crunch
The Economic Times, February 05, 2009, page 1

Sanjeev Choudhary NEW DELHI

SOME of India’s biggest and priciest real estate deals are on the verge of collapse as property firms, hobbled by a severe cash crunch amid a deep downturn in the real estate sector, look to wriggle out or rework terms agreed during the boom years.

DLF, Unitech, BPTP, Emaar-MGF and Jet Airways—corporate majors behind some of the biggest land deals of the last two years—are now trying to restructure them to make the terms more financially viable.

New Delhi-based realty firm BPTP is seeking to dissolve a nearly Rs 5,000-crore deal for 95 acres of prime commercial land in Noida—India’s and Asia’s priciest land deal—which it won in an auction last March. The developer is now trying to make use of a new Uttar Pradesh government policy that allows land buyers in Noida, Ghaziabad and other parts of the state to extend payment tenures and deals shrunk in size, albeit upon payment of a penalty.

“Following the UP government policy announcement, BPTP has made an application to the Noida Authority for surrender of plot and are awaiting decision of NOIDA,” BPTP director Sudhanshu Tripathi said. BPTP has so far paid Rs 1,300 crore, funded mainly through private placement of equity and its four special economic zones. It will have to pay 10% fine on the sum already paid—Rs 130 crore more—to the government to settle the matter.

BPTP is not alone. Unitech too is using this window of opportunity extended by the UP government whereas its larger rival and India’s top property company DLF has asked the Delhi Development Authority to rework the deal for the country’s proposed largest convention centre in Delhi.