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Rakesh Sood
New Delhi, June 16: NRIs and foreign investors waiting to sell their housing projects to the Indian government are now faced with the prospect of their dreams being shattered.
With the inordinate delay in clearance of foreign direct investment in housing following ministerial wrangles, foreign investors are doubtful whether their projects in India will see the light of day. Fed up with government indecisiveness, some are even thinking of reconsidering their investment plans.
The plight of Kishore Kaul, an NRI and the president of Global Construction, a $50-million construction company in California is a case im point. Kaul wanted to develop a 500 acre mini city-complete with waterfront houses, sandy beaches, hospitals, play grounds, shopping malls and restaurants-at Davangiri in Navi Mumbai at a cost of $7 million.
Two years ago, he submitted a proposal to the Maharashtra government to purchase Cidco-owned land at Drongiri. The authorities even announced a global tender for land. Nobody participated inthe tender but the government refused to give it to Kaul as bitten by the Enron misadventure once, they wanted to stay out of negotiated deals. Others like Sunil Taparia, chief executive officer of the Pacific Land Development, a wholly-owned subsidiary of Indo-Rama group, is hoping that the government will fulfill its promise of farming out land free to the developers.
Taparia feels unless that happens, a new project in Delhi is not likely to be financially viable. He has worked out a hypothetical balance sheet showing calculations of returns to a private developer on a 30-acre site in south Delhi.
According to him, if a builder buys land at the current market price, sells 10 per cent of the built up space at no-profit-no-loss basis and contributes to the Shelter Fund at 20 per cent of average floor area ratio, he will end up with an net loss of Rs 100 crore.
The company has to its credit projects on Times Square in New York ( a 16 storeyed office complex) and Minar 2000 (a 21-storey office complex inDjakarta). But in its one year of existence in India, the company has not secured a single project.
These examples, industry sources, are worrying as the cash starved housing sector in India requires a whopping Rs 1,50,000 crore to fill up a gap of an estimated 33 million housing shortage. These builders had chalked out their plans on the promises held out by the former urban development minister Ram Jethmalani. Jethmalani had said that it was only foreign money that could ease the crippling housing shortage.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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