As if the existing woes were not enough for the country’s cash strapped real estate companies, there are more worries coming their way. And this time, there is trouble brewing for the country’s largest realty player, DLF, in its ambitious project at Bidadi near Bangalore. The 9,000 acre New Bangalore project at Bidadi in Karnataka, was supposed to be a landmark, but now it looks like it is all but set to disappear. The project, a joint venture between DLF and Dubai based Limitless, announced in 2007, has been aborted for now and with it Rs 60,000 crore of investment has gone. Bidadi was supposed to be the biggest integrated real estate development in the country. While DLF declined to comment, Limitless told NDTV that it pulled out of the project because the government couldn’t get the land together.
Limitless and DLF won the bid to build Bidadi in October 2007. Under the agreement, the government is responsible for the land acquisition. Unfortunately, even after 15 months, the land acquisition did not advance. As a result, Limitless and DLF have notified the government that they are reconsidering their position. However, Limitless remains optimistic about India as a future market and will continue to explore viable opportunities there. Limitless Holdings is owned by the Dubai World Group, one of the largest diversified business houses in Dubai.
One of the reasons for its decision could also be the acute fund crunch that it is facing in its home market. Dubai’s property market has been among the worst hit during this recession. However, according to financial sector experts, the state governments will have to revisit and change the financial terms and conditions of many big bang projects that they had awarded to private developers in the hay days. It’s because developers have no money and worse, there are few buyers of real estate out there. Navjeet Singh Sobti, Executive Vice-Chairman at Almondz Global Securities, said, “Many projects for which companies had aggressively bid in the past are not that viable now and many companies are looking at exit options.” Meanwhile, as political resistance to land purchases builds up and overseas investors run out of money and patience, the real crunch may be far worse than we have seen so far. The challenges are all the more serious when it comes to big projects like Bidadi—which show that big may not always be beautiful.