DDA to lend Rs 100 crore to Emaar
The Economic Times, March 28, 2009, Page 15
Sanjeev Choudhary NEW DELHI
DELHI Development Authority (DDA) has agreed to lend Rs 100 crore to cashstrapped realty firm Emaar MGF to ensure the Commonwealth Games Village project is completed on time, a DDA official said.
But the development agency is willing to consider lending more later, he added. DDA would extend the Rs 100-crore loan if Emaar MGF offers apartments worth the same value either as collateral or for outright sale to the government-run body. The Village will have 1,168 apartments to accommodate 8,500 athletes likely to participate in the Commonwealth Games.
DDA has set up a committee to decide on the value of apartments in the village. The panel is expected to submit the valuation report in two weeks. Following this, DDA will decide if it wants to buy these apartments or give a loan using them as security.
It will be difficult for DDA to justify buying apartments at a steep price because it will have to sell them later. DDA is known to sell apartments at 30-40% discount to market rate.
Emaar MGF has been insisting DDA to buy apartments because the purchase can bring in some cash to the developer, whereas a loan will have to be repaid in a falling market.
A DDA spokesman said: “We are yet to take a final decision, but DDA will do all that is required to facilitate the timely completion of Commonwealth Games Village.”
Three months ago, Emaar MGF had requested DDA for a Rs 300-crore loan, saying it would not be able to meet the deadline of April 2010 due to a cash crunch.
Emaar MGF had bagged the project in 2007 after bidding Rs 321 crore for it. According to its contract with DDA, Emaar MGF can sell twothird of the total apartments. The balance will be handed over to DDA for free. The village, located on the bank of river Yamuna in east Delhi, is almost 45% complete.
A booming realty market, good location and high-quality features had encouraged Emaar MGF to price the project aggressively.
With a price tag ranging from Rs 1.8-4.8 crore, apartments in the athletes village are being offered by Emaar MGF for an average price of Rs 13,000 per sq ft.
But, a combination of global and local economic factors have badly impacted the property market and sent prices crashing. Buyers are staying away, waiting for a price cut similar to those in some projects belonging to country’s largest realty company DLF.
DLF will shortly launch a housing project in Delhi, around 7 km from Connaught Place, almost the same distance as Emaar MGF’s Village. But DLF’s project is likely to be priced at almost half Emaar’s rate.
Emaar MGF officials say the company will not lower prices to induce buying as the project is already competitively priced. Around 260 apartments have been sold so far and last four months have been very bad, they added.
NEW LIFE
Delhi Development Authority agrees to lend to ensure timely completion of the Commonwealth Games Village project
It may lend more if Emaar offers apartments worth the same value either as collateral or for outright sale
DDA has also set up a committee to decide on the value of apartments which is expected to submit the report in two weeks
Emaar MGF had earlier requested DDA for a Rs 300-crore loan, saying it would not be able to meet the April 2010 deadline due to a cash crunch
The Economic Times, March 28, 2009, Page 15
Sanjeev Choudhary NEW DELHI
DELHI Development Authority (DDA) has agreed to lend Rs 100 crore to cashstrapped realty firm Emaar MGF to ensure the Commonwealth Games Village project is completed on time, a DDA official said.
But the development agency is willing to consider lending more later, he added. DDA would extend the Rs 100-crore loan if Emaar MGF offers apartments worth the same value either as collateral or for outright sale to the government-run body. The Village will have 1,168 apartments to accommodate 8,500 athletes likely to participate in the Commonwealth Games.
DDA has set up a committee to decide on the value of apartments in the village. The panel is expected to submit the valuation report in two weeks. Following this, DDA will decide if it wants to buy these apartments or give a loan using them as security.
It will be difficult for DDA to justify buying apartments at a steep price because it will have to sell them later. DDA is known to sell apartments at 30-40% discount to market rate.
Emaar MGF has been insisting DDA to buy apartments because the purchase can bring in some cash to the developer, whereas a loan will have to be repaid in a falling market.
A DDA spokesman said: “We are yet to take a final decision, but DDA will do all that is required to facilitate the timely completion of Commonwealth Games Village.”
Three months ago, Emaar MGF had requested DDA for a Rs 300-crore loan, saying it would not be able to meet the deadline of April 2010 due to a cash crunch.
Emaar MGF had bagged the project in 2007 after bidding Rs 321 crore for it. According to its contract with DDA, Emaar MGF can sell twothird of the total apartments. The balance will be handed over to DDA for free. The village, located on the bank of river Yamuna in east Delhi, is almost 45% complete.
A booming realty market, good location and high-quality features had encouraged Emaar MGF to price the project aggressively.
With a price tag ranging from Rs 1.8-4.8 crore, apartments in the athletes village are being offered by Emaar MGF for an average price of Rs 13,000 per sq ft.
But, a combination of global and local economic factors have badly impacted the property market and sent prices crashing. Buyers are staying away, waiting for a price cut similar to those in some projects belonging to country’s largest realty company DLF.
DLF will shortly launch a housing project in Delhi, around 7 km from Connaught Place, almost the same distance as Emaar MGF’s Village. But DLF’s project is likely to be priced at almost half Emaar’s rate.
Emaar MGF officials say the company will not lower prices to induce buying as the project is already competitively priced. Around 260 apartments have been sold so far and last four months have been very bad, they added.
NEW LIFE
Delhi Development Authority agrees to lend to ensure timely completion of the Commonwealth Games Village project
It may lend more if Emaar offers apartments worth the same value either as collateral or for outright sale
DDA has also set up a committee to decide on the value of apartments which is expected to submit the report in two weeks
Emaar MGF had earlier requested DDA for a Rs 300-crore loan, saying it would not be able to meet the April 2010 deadline due to a cash crunch
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