After Unitech’s information technology special economic zone (IT SEZ) in Kolkata, another IT park has taken a hit due to the slowdown in the real estate sector.
After Unitech’s information technology special economic zone (IT SEZ) in Kolkata, another IT park has taken a hit due to the slowdown in the real estate sector.
Puravankara Projects Ltd, which had won the bid to develop the Hi-Tech City in Hyderabad on a 30-acre plot in 2007, will now be developing only 20 acres.
The Bangalore-based realtor had to pay a total of Rs 630 crore for the 30-acre plot. Of this, it has already acquired 20 acre for Rs 403 crore. However, it has now been allowed by the Andhra Pradesh government to cancel the purchase of the remaining 10 acre for Rs 227 crore without any penalty.
Ravi Ramu, director (finance), Puravankara Projects Ltd, said the company’s move was spurred by the current condition of the realty market.
“The decision (on the 10 acre) was taken some weeks back (early December) to cancel the liability on our balance-sheet. We are going ahead with development on the 20 acre for which we have already made payments in two tranches,” said Ramu.
Though there usually is a penalty for cancelling such an obligation, the Andhra government has waived it off for the developer. The real estate company is planning to begin work on the project soon.
“It will be a mixed-use development of retail, residential, commercial and hospitality projects,” said Ramu. The investment on the project is now expected to fall by a third to Rs 2,334 crore from Rs 3,500 crore. Currently, Puravankara has a land bank of over 125 million sq ft, 65% of which is in Bangalore.
Sources said that Puravankara was paying Rs 22 crore per acre which was rather steep. The Andhra Pradesh government couldn’t cancel the deal as no other developer was ready to pay such high rates for the plot after land prices fell by over 20% in the area. If Puravankara went ahead with the buy it would have increased its leverage, which wouldn’t be wise as liquidity is hard to come by in these times.
An analyst from an international brokerage, on the condition of anonymity, said, “(Cancelling the 10-acre deal) is a good move because right now, the demand for IT and commercial space is low and it will take more than two years to develop that project.”
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}