Oberois to bid for Dharavi project

Oberoi Constructions, promoted by billionaire Vikas Oberoi, has tied up with the $10 billion Chinese real estate firm Shimao group to bid for the Rs 10,000-crore Dharavi Redevelopment Project.

The company has floated a special purpose vehicle (SPV)with Shimao for the same. The consortium will bid for all the five sectors under the Dharavi redevelopment plan. However, the equity holding of both the entities is not known.

With this tie-up, Oberoi has joined property developers such as HDIL and Akruti Nirman, which have tied up with international players to bid for the project. While HDIL has tied up with investment major Lehman Brothers, Akruti has formed a consortium with Dubai-based Dubai World to bid for the project.

"We have tied up with Shimao because of their experience in executing large projects. India is also undergoing similar transition like China. So we felt their experience in the Chinese market can be used in the Indian scenario. The location and sheer size of the project have prompted us for an international tie-up," said Saumil Daru, CFO, Oberoi Constructions.

The Shimao group has two listed companies, Shimao Property, which is listed on the Hong Kong Stock Exchange, and Shimao Stock, with a combined market capitalisation of HK$80 billion.

According to the group's website, by July 31, it had 28 projects under development in 20 cities in mainland China, plus two projects in Russia and Hong Kong.

The group is also a major player in the hospitality sector in China, and runs Le Meridien Sheshan, Le Royal Meridien and Hyatt On The Bund in Shanghai, with a 20 per cent market share in the luxury hotels space.

Oberoi Constructions holds a portfolio of 26 projects in the residential, commercial and retail sectors, spread over two million sq ft in Mumbai. In January, global investor Morgan Stanley invested $150 million in the company to pick up nearly 10 per cent stake.

The Dharavi project has drawn the attention of both domestic real estate majors such as DLF, Indiabulls, Lanco, L&T, Shapoorjee Pallonjee group, Videocon, Sobha, Lodha, Kalpataru and global property developers such as Dubai's Emaar Properties, South Korea's Hawnha group, Saudi Arabia's Banaldin group, which have submitted expressions of interest with the Slum Rehabilitation Authority (SRA) of Maharashtra.

The big draw of the project is the high floor space index (FSI) of 4, which will allow companies to develop more area in Dharavi, considered as Asia's biggest slum. Mumbai, barring some places, has an FSI of 1.33. The developers will provide 30 million sq ft of space, including housing, schools, parks and roads. In return, they will be allowed to build 40 million sq ft of home and office space for sale. The SRA had received 26 bids from various consortiums, including 78 real estate firms, many with considerable experience in township construction.

The 57,000 families that live in Dharavi will be rehabilitated in 225 sq ft multi-storeyed tenements, which will be maintained by the developer for 15 years. The entire area has been divided into five sectors of about 1.5 crore sq ft each on an average. The project is expected to generate close to Rs 25,000 crore in revenues for the Maharashtra government.

Currently, the project is in the pre-qualification stage. The shortlisting of the companies will be completed by the month-end, after which the SRA will invite financial bids. The SRA plans to award the final contract by December. The development work is expected to begin by January next.