In Kochi, residential realty projects in distress?

KOCHI: Is Kochi turning into the death-knell for India’s biggest property developers? Or is the city a jinx that the realty majors cannot overcome? The reasons may be different but the fact remains that some of the country’s biggest brands in property business including Delhi-headquartered DLF and Unitech, Mumbai’s HDIL, Subrato Roy’s Sahara Group, Bengaluru-based Purvankara group and Kuwait-based Malayalee’s Dewa Projects are pulling out of Kerala, looking for a bailout or facing bankruptcy.

If it is the court battles and the huge delay in getting clearances which forced DLF to explore exit options from the state, Unitech’s woes relate to the huge pile up of debt (Rs 5,000 crore as of in the last count). The Lucknow-based Sahara Group’s problems started after its founder Roy was sent to Tihar Jail in March 2014 for failing to refund money collected from depositors in schemes deemed illegal by capital market regulator Sebi. Massive debt is the reason for HDIL’s troubles while delay in getting bank loans put Dewa Project at Marine Drive into a coma.

V Thankachan Thomas, secretary of the Kochi chapter of real estate body Credai, said the national players are facing difficulties due to their company-specific issues and it has nothing to do with Kochi or the state. However, he admitted that Kerala is a ‘risky place’ and ‘different market’ vis-a-vis other places. “Big players bring in better technology, practices and quality, forcing the local players to improve their standards so they should be encouraged,” Thomas told Express.

Unitech, Maradu: A non-starter

The Delhi property developer Unitech launched a Rs 750 crore shopping mall-cum-hotel project ‘Great India Place’ at 8-acre plot in Maradu, Kochi in 2010. The company is yet to start work on the site, putting several investors in deep distress. The project was to be implemented through Unitech’s subsidiary Colossal Projects.

The project was sold at a rate of Rs 16,000 per sq ft. As per the plan, the business complex was proposed to be equipped with food courts, restaurants, ATMs, coffee shops, banks, retail outlets etc. The project comprised over 4.48 lakh sq ft gross saleable area. It has been six-years and still there’s no response from the company, investors say. Jaison Anithanam of Kaduthuruthy, an investor who booked 752 sq ft built-up space paying 60 percent upfront (Rs 54 lakh), has been running from pillar to post to recover the money. Anithanam said he has filed an attachment case with South CA, Thevera, against Unitech.

Several investors, who had deposited money with the developer, are counting their losses. ‘Express’ mailed a detailed questionnaire to Unitech spokesperson Priya Kapoor on August 2 but there has been no response till the time of going to press on August 7.


Sahara Group, Kakkanad: In the Sebi lock

The troubled-Sahara Group announced ‘Sahara Grace’, a premium luxury project at Kakkanad, in 2004-05, promising the investors that the homes will be handed over from 2007. Several investors who booked the apartments have been left in the lurch. The Lucknow-based Sahara’s Kochi plans involved four types of towers, ranging from nine to 24-floors comprising residential blocks on about 15-acres of land at Kakkanad. A proposed hotel and shopping mall form part of the future expansion plans at Sahara Grace Kochi, the company had announced during the launch. Sahara’s problems began in 2010 when Sebi barred it from raising funds for a bond-scheme deemed illegal by the stock market regulator. Not even 25 per cent of the Kakkanad project is complete even after more than a decade. A detailed questionnaire mailed to Sahara spokesman Ghulam Zeeshan on August 3 did not elicit any response.


HDIL Kalamassery: The debt trap

The Mumbai-based realtor announced ‘dream project‘ Cyber City at Kalamassery on 70 acres of land acquired from HMT in 2010. The state government had also granted the necessary clearances to the Rs 2,000 crore project which had a complete SEZ status. In the meantime, the company fell into a financial cesspool, due to a huge debt (about Rs 3,000 crore last fiscal) and turning of the real estate cycle. The Kalamassery project, at the time of its announcement in 2010, promised to generate 60,000 new direct jobs. Last heard, HDIL is looking for buyers for the land. There are speculations that talks are at an advanced stage, and a deal may be announced soon. HDIL spokesman could not be contacted for comments.


Dewa Projects, Marine Drive: Battling it out in court

Venugopalan Nair, a Kuwait-based Malayalee and CMD of Dewa Projects, launched the super luxury apartment project ‘Dewa Pier 20’ in 2005-06. In the luxury apartment project, 400 apartments facing Kochi backwaters in six towers surrounded by four acres of landscaped garden was planned. More than a decade after its launch, Dewa is embroiled in a court battle with a consortium of a dozen banks led by the Union Bank of India.

The work on the project is also stuck with only the skeleton of one tower to show. Over 100 investors had booked apartments in the project in 2008. Last heard, IL&FS Investment Managers, which pumped Rs 125 crore into the troubled project in 2010 for a preferential equity stake of 49 per cent, is looking to use the ‘step-in’ clause which permits the fund-provider to take over the project to get it completed and then sell it to pay off the debt.

Credits The New Indian Express

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