Udyog Vihar land deal: Experts eye it as a one-shot case not a signal of real estate revival
Although this deal is being described as a gamechanger by the authorities, the real estate industry however saw it as an attempt by DLF to consolidate its commercial assets in a specific micromarket comprising Udyog Vihar, CyberHub and the proposed Mall of India along the Delhi-Gurgaon ExpresswayUpdated: Feb 27, 2018 23:45 IST
Gurgaon: The purchase of 11 acre prime land by the real estate giant DLF Limited through its subsidiary company shows the massive potential commercial value of the Udyog Vihar area. However, the real estate experts feel the deal does not signal immediate revival for the real estate market.
The National Real Estate Development Council (Nardeco), a group of real estate developers, is evaluating the deal.
Praveen Jain, vice-chairman Nardeco, said, “I believe this auction has happened at higher than the market rate at around Rs 127 crore per acre. I cannot comment if it is good or bad but if a real estate company buys a land at higher price, it will definitely try to derive maximum benefit from it. Nardeco is evaluating the deal.”
The DLF Limited bagged 11.76 acre prime land in an e-auction for whopping Rs 1,496 crore from Haryana State Industrial Infrastructure Development Corporation (HSIIDC) on Monday. DLF’s subsidiary — Aadarshini Real Estate Developers Private Limited — emerged as the highest bidder for the plot.
The reserve price of the site had been fixed at Rs 686 crore and the second largest bidder, Beech Projects, had quoted Rs 1,446 crore.
Although this deal is being described as a game changer by the authorities, the real estate industry however saw it as an attempt by DLF to consolidate its commercial assets in a specific micromarket comprising Udyog Vihar, CyberHub and the proposed Mall of India along the Delhi-Gurgaon Expressway.
They, however, did not see it as a signal of real estate revival in the city calling it a “one-shot deal” in which both government and DLF were in a win-win situation.
“The government agencies are cash strapped and they have neither money for development nor to pay for land acquisition. But they have realised that they are sitting on very valuable real estate which they themselves can’t monetise but sell it on premium,” said Ramesh Menon, CEO, Certes Realty, who has been part of many large real estate transaction.
Like Menon, the real estate industry watchers said that reviving the market was not possible with a one-off deal as there were many short-term and long-term factors at play. “This deal would not impact the market in anyway as the sentiment in the market has not improved and the buyers are reluctant to invest in the market. There has been upswing in the secondary market but not anything more,” said Sanjay Sharma, a real estate consultant.
Santhosh Kumar, vice-chairman, Anarock Property Consultants, said such a development would certainly be a distinct differentiator in what is a very competitive market environment.
“Udyog Vihar is an industrial area with small offices and local IT firms. It already has considerable office space supply. The intention behind acquiring such a huge land parcel could be to expanding the company’s commercial portfolio.” said Kumar.
The reason why the industry is not betting big on revival of realty is that many big ticket deals have failed to deliver what was promised.
In 2006, Unitech had won 340 acres in Noida through auction for Rs 1,583 crore, but the project is incomplete. Similarly, BPTP had bagged 95 acres in Noida’s Sector 94 for Rs 5,006 crore in 2008. Due to fund crunch, it surrendered the land in 2009.
On the other hand, in DLF’s another big ticket investment in at Moti Nagar in Delhi, the real estate major has completed three phases of its residential project Capital Greens and a commercial tower.
First Published: Feb 27, 2018 23:45 IST