Auction failure: DDA to cut reserve price of 10 hotel sites

After the recent debacle in its attempts to auction 10 hotel sites, the Delhi Development Authority has decided to cut the reserve price by 10-20 per cent. The agency is now looking at re-auctioning these plots next month.

DDA officials told Business Standard that the reserve price of the four sites in Dwarka, which industry experts said were unrealistically high, would be reduced by approximately 20 per cent.

The reserve price of the remaining five plots is likely to be cut by 10 per cent. The sites are in Shalimar Bagh, Paschim Vihar, Rohini and Shahadra.

The DDA was expecting to make at least Rs 2,669.13 crore, as indicated from the reserve price, from the auction of these sites last month. Two-thirds of this was from four plots in Dwarka, where the total reserve price had amounted to Rs 1,812 crore.

Of these four sites, the land use for two sites in Sector 14 is for hotel, and general and commercial multiplex. The land size of these two plots is 7.39 acres and 6.06 acres respectively and had a reserve price of Rs 592.73 crore and Rs 723.10 crore respectively. This had worked out to Rs 22,484 per square feet and Rs 22,452 per square feet respectively.

To put this in perspective, residential space in pockets of New Delhi's Defence Colony, Greater Kailash-II, and Panchsheel Park sell at this rate. In contrast, 1,450 square feet sized apartments in Dwarka are being sold between Rs 3,300 and Rs 3,600 per square feet.

The size of the other two hotel sites that the Delhi Development Authority had auctioned are 3.36 acres with a reserve price of Rs 233.13 crore and 3.8 acres with a reserve price of Rs 263.38 crore. This works out to be Rs 15,927 per square feet and Rs 15,928 per square feet respectively.