Realty slump sours BPTP mega land deal
The Financial Express, February 05, 2009, Page 1
Corporate Bureau
New Delhi: India’s costliest-ever land deal has been badly burnt in the real estate meltdown. BPTP, which bagged a 95-acre plot of land in Noida on the outskirts of New Delhi last March at a cost of Rs 5,006 crore, has returned the land to the district authority. The closely-held BPTP had outbid bigger real estate players like DLF, Ansal API and Omaxe Ltd.
The termination of the deal is the latest in a series of bad news that has hit Indian real estate. The highly leveraged sector has seen cash flows disappear as demand for malls and residential plots have plummeted.
As a result, companies are redrawing their business plans. DLF has decided to reduce prices of future projects by 15%, develop 20 million sq ft of affordable housing, raise Rs 2,000 crore from selling non-strategic assets and clear short-term debts by raising long-term funding. Parsvnath has pledged 10% of the promoters’ share, put its retail and overseas projects on hold and has decided to go slow with its SEZ projects.
Unitech is also generating additional cash flows through asset sales and infusion of private equity at the project level. Brokerage firm Macquarie Research in a report on DLF’s fund raising plans issued on Tuesday expressed concern that key primary sources of capital have dried up for real estate companies in the country.
BPTP had already run into problems paying the instalments for the Noida land. It had defaulted on the very first instalment and sought an extension in the deadline. The company is exiting the project under a new policy framed recently by the UP government, which allows developers to get payments rescheduled, seek a payment moratorium, surrender the plot after forfeiting 10% of the amount, or take land against payments already made.
“BPTP has submitted an application to the Noida Authority to surrender (the) plot and is awaiting its decision,” BPTP director Sudhanshu Tripathi said in a statement. Sources said the Noida Authority is likely to meet on Friday to take a decision on the matter.
In BPTP’s case, the authority will not refund the money paid so far for the land, but after deducting 10% of the payment made, will offer the company land for the amount. According to a BPTP spokesperson, the company has so far paid Rs 1,300 crore towards the land. “We were unable to pay the rest and had applied last month to the authority to surrender around 75% of the 95-acre plot, deducting the 10% penalty under the guidelines,” the spokesperson said.
BPTP had earlier planned to invest over Rs 3,000 crore to build a ‘commercial city’ comprising offices, retail outlets, hotels and service apartments with a total saleable area of 10 million sq ft. It was required to pay 25% of the land cost after winning the bid. BPTP had bid Rs 1,30,207 per sq m, against the reserve price of Rs 77,000 per sq m. The 95-acre land deal eclipsed the country’s second-largest real estate player Unitech’s buy of 1,750 acre in Vizag for Rs 3,350 crore.
The Financial Express, February 05, 2009, Page 1
Corporate Bureau
New Delhi: India’s costliest-ever land deal has been badly burnt in the real estate meltdown. BPTP, which bagged a 95-acre plot of land in Noida on the outskirts of New Delhi last March at a cost of Rs 5,006 crore, has returned the land to the district authority. The closely-held BPTP had outbid bigger real estate players like DLF, Ansal API and Omaxe Ltd.
The termination of the deal is the latest in a series of bad news that has hit Indian real estate. The highly leveraged sector has seen cash flows disappear as demand for malls and residential plots have plummeted.
As a result, companies are redrawing their business plans. DLF has decided to reduce prices of future projects by 15%, develop 20 million sq ft of affordable housing, raise Rs 2,000 crore from selling non-strategic assets and clear short-term debts by raising long-term funding. Parsvnath has pledged 10% of the promoters’ share, put its retail and overseas projects on hold and has decided to go slow with its SEZ projects.
Unitech is also generating additional cash flows through asset sales and infusion of private equity at the project level. Brokerage firm Macquarie Research in a report on DLF’s fund raising plans issued on Tuesday expressed concern that key primary sources of capital have dried up for real estate companies in the country.
BPTP had already run into problems paying the instalments for the Noida land. It had defaulted on the very first instalment and sought an extension in the deadline. The company is exiting the project under a new policy framed recently by the UP government, which allows developers to get payments rescheduled, seek a payment moratorium, surrender the plot after forfeiting 10% of the amount, or take land against payments already made.
“BPTP has submitted an application to the Noida Authority to surrender (the) plot and is awaiting its decision,” BPTP director Sudhanshu Tripathi said in a statement. Sources said the Noida Authority is likely to meet on Friday to take a decision on the matter.
In BPTP’s case, the authority will not refund the money paid so far for the land, but after deducting 10% of the payment made, will offer the company land for the amount. According to a BPTP spokesperson, the company has so far paid Rs 1,300 crore towards the land. “We were unable to pay the rest and had applied last month to the authority to surrender around 75% of the 95-acre plot, deducting the 10% penalty under the guidelines,” the spokesperson said.
BPTP had earlier planned to invest over Rs 3,000 crore to build a ‘commercial city’ comprising offices, retail outlets, hotels and service apartments with a total saleable area of 10 million sq ft. It was required to pay 25% of the land cost after winning the bid. BPTP had bid Rs 1,30,207 per sq m, against the reserve price of Rs 77,000 per sq m. The 95-acre land deal eclipsed the country’s second-largest real estate player Unitech’s buy of 1,750 acre in Vizag for Rs 3,350 crore.
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