Realty project may create 3 lakh jobs

Gulf deal may transform the Mumbai-Pune expressway with four ‘cities’, and boost the entertainment industry

MUMBAI: The Gulf Finance House (GFH) project will be a shot in the arm for Maharashtra, which is trying to regain its earlier status as an investor-friendly hub. Among other things, the four ‘cities’ — energy, telecom, software and entertainment — proposed to be ready by 2013, will create three lakh jobs in the state. But the Rs40,000-crore ($10 billion) Economic Development Zone agreement between the Bahrain-based investment bank and state government has raised some questions.

“I am trying to understand the reason behind the big announcement. I haven’t heard of GFH. They have not mentioned where and how much land it has acquired already, and whether the $650 million (Rs2,600 crore) they have already raised, is India-specific. How will it raise the rest?” asks Akshaya Kumar, managing director of Parklane Property Advisory Services.

“The numbers just don’t add up,” says a banker. “The cost of land for the 1,600 acres would have come to no more than Rs250 crore, on the higher side. So why has GFH raised Rs2,600 crore? We have local builders like the Hiranandani or the Akruti groups, who are developing properties over as much land, so why has the state government singled out this Bahrain group to give its blessings?”
 
The deal, however, is likely to change the landscape of the Mumbai-Pune Expressway. Plans drawn up by GFH propose theme parks, hotels, shopping centres, theatres and high-end apartments as part of the four “cities”. Energy City, which will occupy over 600 acres of land and be developed at an estimated $2.8 billion (Rs11,200 crore), will provide business infrastructure for both local and foreign oil and gas producers, as well as downstream refiners and producers. The Software and Telecom cities, planned over 300-400 acres, will offer IT-related facilities, anchor tenants, end-users and local developers. About 300-400 acres are reserved for the Entertainment City.

The investment will certainly be a big boost for the Mumbai’s entertainment industry, which has been demanding space to grow modernise, says Rajeev Jalota, managing director of the Maharashtra Industrial Development Corporation (MIDC). “Filmcity at Goregaon is overbooked. The studios do not have any modern facilities, and the rapidly-growing animation industry needs more space. The entertainment zone will, hopefully, address some of these issues.’’

According to Pranay Vakil, chairman of Knight Frank global property consultants, “With the limits of both cities being pushed back, Mumbai and Pune will become like one big city. The distance will practically disappear, giving rise to better connectivity between these two places. Besides, going by Dubai’s experiment of exclusive media and IT hubs, it’s clear that having similar facilities under one roof, always pays dividends.’’

“The investment is five times more than the initial plan of building a city solely for energy companies, at a cost of $2 billion (Rs16,000 crore),” GFH acting chief executive officer Peter Panayiotou said, about a second Energy City to be developed in the next 4-5 years. The bank has already purchased 900 acres of land, and raised $630 million (Rs2,520 crore) through equity and high networth individuals, for the first phase of construction in Mumbai. It will later seek more cash for other investments.

The GFH project is, by far, the single largest foreign direct investment in Maharashtra, which has bagged projects worth more than Rs1 lakh crore in the past two years. The move also signals a reverse trend of Middle East investors - who traditionally invest in Europe and America - looking at India’s booming economy to park their money.

“With the weakening dollar and the US property market seeing a slump, they now want to spread their risks. Over the next few years, we are going to see a lot of this surplus money - mainly petro dollars from around the globe - being invested in India, either in the capital market or real estate,’’ says Anshuman Magazine, managing director of CBRE, a global real estate funds group.

State industries secretary VK Jairath is a happy man. Not wanting a repeat of Nandigram, or an earlier move to help Mukesh Ambani get land for the Navi Mumbai Special Economic Zone, the state has decided to stay away from trying to acquire land on behalf of foreign investors. “The company has purchased land on its own. No fiscal incentives were offered. Our role is of a facilitator, of giving investors like GFH soft support by processing various clearances, like the non-agriculture certificate and the environment clearance required to set up a mega project,’’ says Jairath. The single window system earlier push through a Siemens transformer manufacturing unit project in Pune in just 28 days.