The liquidity crunch in the real estate sector has hit Indian Railways’ efforts to lease out surplus land for commercial development on public-private partnership.
Last week, the Railway Land Development Authority (RLDA) cancelled the bidding process for developing a private residential complex at Sarai Rohilla in Delhi. A senior official at RLDA said, “The developer at Sarai Rohilla was repeatedly deferring the date for making the upfront payment for the plot. We have decided to drop the tender for the project.”
The site, spread over 11 hectares, had been offered last April for constructing a residential complex with facilities such as a shopping complex and health care centres. The reserve price had been set at Rs 675 crore.
The official added, “Due to the credit crunch in the real estate sector, we are not being able to get the reserve price we are quoting for our plots. We have specifically decided to take a relook at the sites which had been identified for residential use. The matter is now under the consideration of the Railway Board.” This decision has also put a question mark on the 39-hectare residential complex project proposed at Nirala Nagar, Kanpur.
Plans to build retail space at Visakhapatnam in Andhra Pradesh have run aground, with the company which had won the contract forfeiting the bid security because it cannot go ahead with the purchase of the land. It is the same story at Bandra, Mumbai, where a 4.5-hectare plot had been put up for bids. RLDA had brought down the reserve price to Rs 3,960 crore from the initial Rs 4,628 crore at Bandra, but the project had found only one taker (DLF). The tender process there has now been put on hold, because of a dispute with local authorities on ownership.
Of the 12 sites, spanning 80 hectares, a development agreement has been signed for a solitary location at Gwalior. Commercial real estate development, which includes facilities for organized retail, shopping malls, food plazas and an entertainment zone, is being considered for the site.
Another agreement is expected to be concluded soon for constructing hospitality and retail spaces at Bangalore. RLDA expects to rake in about Rs 60 crore from a one-time upfront payment from developers at these two locations.
RLDA had been set up in 2007 to commercially develop the surplus and unused land with the railways. Till date, from the 43,000 hectares in the railway land bank, 133 sites, spanning 1,500 hectares, have been entrusted to it by the ministry. Consultancy work for 51 sites is in progress, while another 70 plots are under inspection. However, with the real estate sector continuing to remain in the red, the projects have not made much headway.
