Govt refusal to allow foreign partner kills DLF convention centre project

Written by Corporate Bureau | New Delhi | Updated: Mar 8 2009, 05:29am hrs
Delhis mega convention centre to be built by the countrys largest real estate firm, DLF, has been scuppered, as the government is unwilling to let the company seek a foreign equity partner for the prize project.

Speaking at the Express Groups Idea Exchange programme on Friday, DLF group chairman KP Singh said, We are ready to revisit the project if we are allowed to rope in foreign partners for funding, including private equity players. The Delhi convention centre is one of four state-of-the-art facilities announced in Union Budget 2007-08.

Singh said unless Delhi Development Authority (DDA) allowed a special purpose vehicle for the project to include additional equity players, the project was unlikely to take off. DLF bagged the development, being sole bidder, in July 2007. Its financial bid was Rs 901.8 crore, against a reserve price of Rs 900 crore.

Spread over an area of 14 hectare, the mega convention centre was slated to come up at Dwarka, near the citys airport, and was billed as one of DDAs most ambitious projects. The complex was to have an integrated built-up area of 1.83 lakh sq m, comprising a 86,400-sq m convention & exhibition complex, a 60,000-sq m built-up area for a hotel complex, and 36,600 sq m for a commercial complex.

Discussing the governments role in real estate and urban development, Singh said it should play the role of an enabler and facilitator. It is not possible for developers to acquire huge tracts of land. As a result, the government should play an active role in acquiring land for developments, Singh said.

DLFs township in Dankuni, West Bengal, has been shelved because the state government was unable to acquire 4,840 acre of land. The company subsequently offered to scale down the project to 500 acre. But the state government failed to acquire even this smaller tract of land. The proposed township was originally estimated to cost Rs 40,000 crore and was to be DLFs biggest project in eastern India.

DLF, which has recently reduced the prices of its properties by 15-20%, is not planning to slash rates any further. Instead, it expects other developers to follow suit, which would lead to a price correction and revive demand. Singh said interest rates should come down further to boost the housing market and EMIs on housing loans should be exempt from income tax.