Capitaland, which ploughed S$30.2million in Runwal Builder’s Orchard Residency project at Ghatkopar in 2006, has pulled out of the venture without booking any profit.
They launched with a bang, and went out with a whimper.
Singapore-based investor firm Capitaland, which ploughed S$30.2million in Runwal Builder’s Orchard Residency project at Ghatkopar in 2006, has pulled out of the venture without booking any profit. The withdrawal of the foreign investor at the height of the slowdown in the realty sector is reflective of its disappointment with the Indian partner, with Capitaland not even recovering the basic interest after deploying its equity for almost five years.
Capitaland’s S$30.2 million (Rs 82 crore then) investment for a 49 % stake in Runwal Capitaland was touted as a significant development for the city’s realty sector, when the deal came through in February 2006. Far from accruing annual returns on investment in the range of 20-25%, the Singapore-based firm has settled for a valuation of just Rs102 crore, actually suffering losses on the investment after conversion to Singapore dollars.
“The disenchantment of the foreign investor was evident from the fact that it did not make any further investments in Runwal’s project after the initial contribution of equity,” says an industry observer, recalling that the two partners had jointly announced a $100 million plan at the time of the launch in 2006, which subsequently fizzled out.
Officials from Capitaland offices in Mumbai as well as Singapore did not respond to queries regarding the divestment of the stake in Runwal Capitaland.
The Singapore-based partner’s abrubt pullout - and the prospect of shelling out Rs 102 crore - at a time when sales have slowed down, has left the Chembur-based developer facing a liquidity crunch. To make matters worse, almost 100 flats in the 590-apartment Orchard Residency project are still lying unsold and the cash-strapped builder is now cutting the rate to offload the residential stock. The smallest property in the complex - a 2BHK flat with a carpet area of 750 square feet - that was being quoted at Rs 1.30-crore till six months ago, is now being offered at an upfront discount of a little more than 10 %- at Rs 1.15 crore.
“If you want to finalise now, you can meet our director Vikas Arora; he can give further discounts, depending on the floor and the location of the flat,” reveals a sales manager at the Orchard Residency site.
But even at the truncated prices, buyers are not exactly queueing up to book the flats. Says a leading Ghatkopar-based realty consultant, “Where reputed developers sell 100% of the flats within weeks of launching a project, it doesn’t augur well for Runwal that even after five years, so many flats are yet to be sold,” the consutlant said, adding that the developer may have misjudged the market by citing the Singapore design factor and slapping a huge premium.
Sandeep Runwal, director, Runwal Group, refused to offer comment on Capitaland’s divestment of stake and the subsequent liquidity cruch that the group faces.
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