The West Bengal state government is set to reduce the reserve price for the township development projects it proposes to launch in partnership with private companies.
Though the proposal needs the approval of the state’s cabinet, key government officials said the reserve price for each is to be reduced by at least 20% to attract bidders. In some cases, the reserve price could be lowered by up to 25%, they added.
Though West Bengal under chief minister Mamata Banerjee has stopped building affordable homes through joint sector companies, the state last year announced a plan to build six theme cities—or small townships—in semi-urban areas in partnership with private companies. Bids were invited for one, but the project found no takers.
Real estate developers in the state have raised questions about the viability of the projects, said the officials cited above. They asked not to be named. By reducing the reserve price, the state is only trying to make the projects more lucrative for potential partners, they added.
Like in any joint sector project, 25% of saleable space in these townships will be reserved for economically challenged people. At least 25% more has to be developed in line with the chosen theme for each township; the balance 50% will have no curbs on development.
But developers are concerned about the demand for housing and urban infrastructure in smaller towns such as Siliguri, Asansol, Bolpur, Kalyani, Baruipur and Howrah, where these so called theme cities are to be developed, officials said.
To boost confidence among private developers, the state government is even considering building one of these townships on its own, but there are concerns about funding and project management capability, according to these officials. The state had initially planned that it would provide land for these projects, while private developers would build homes and civic infrastructure.
The state government is planning to build one of the proposed theme cities on its own in Bolpur to establish their viability and to boost investor confidence, said Debashis Sen, principal secretary in the urban development department. It will be developed by the state-owned West Bengal Housing Infrastructure Development Corp., of which Sen is the chairman.
Interest in these projects is reviving, according to Sen. Even developers from abroad—from countries such as Germany and China—have started to enquire about them, he said. The Chinese developers are particularly interested in the proposed township to be built near Siliguri in north Bengal, he added.
However, the key to making these projects viable is the marketing plan, according to Sen. The original blueprint is being tweaked for which a cabinet approval is required, he said, adding that some regulations may have to be eased. But he declined to divulge further details immediately.
“Our hands are full,” said Sushil Mohta, president of the West Bengal chapter of Confederation of Real Estate Developers Associations of India—or Credai, a lobby group. More than the reserve price, developers are sceptical because of the “sluggish demand” for housing in the state, according to Mohta. But at the same time, Credai Bengal is actively supporting the state government seek investments from foreign developers, he added.