Mumbai:Real estate firm Hirco has defaulted on payments to lenders for its two large Rs 1,000 crore-plus townships in Panvel and Chennai, casting a shadow on the future of the projects.
Work on the firm's project in Panvel, Raigad district, has been stalled for the past few months. The project has a mix of commercial and residential properties and is spread over 300 acres. More than 1,000 apartments are believed to have been sold in Panvel. Hirco claims to have more than 66 million sq ft of development in the two township projects being built by its subsidiary, Hiranandani Palace Gardens.
Following the default, the residential township outside Chennai, the Hiranandani Palace Gardens, is under threat of a takeover by the lenders, TOI has learned.HDFC may sell off Hirco's Chennai property
Mumbai: Two mega township projects undertaken by Hirco have run into trouble following loan defaults by the developer. HDFChad advanced aroundRs 500 crore in two tranches to the Chennai projectjointly promoted by Niranjan Hiranandani and his daughter Priya. Both have since stepped down from theHircoboard.Itisbeing built in three phases on an over-200 acresprawl.
The lender has already classified the first tranche as an NPA (non-performing asset) and will classify the second tranche similarly. It plans to send a notice to the firm for repayment under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act(SARFAESI).
If Hirco fails to pay up, HDFC will attach the Chennai property estimated to be worth several times the loan. The property would then be auctioned.Marketsourcessaidone of the Hiranandanis may bid for it. "Because of a family dispute, neither family member is willing to bring in fresh capital for the project. With RBI norms becoming stricter on project lending, there cannot be any progress unless promoters bring in money,'' said a source familiar withthedevelopment.
Early this year, Tata FinanceCapital Servicesdragged thecompany tocourtfor a term loan default of Rs 76 crore, and demanded the company's liquidation for non-payment.
Hirco's chief financial officer, Samir Shroff,wasunavailable for comment and did not respond to text message and phonecallsseeking comment.
A Hiranandani Constructions spokesperson said, "Niranjan Hiranandani resigned from Hirco Plc around 22nd December 2010. This knowledge is in public domain. Hence the details of the companies, which you areseeking now,is not available with us." It is learned that Hiranandani has made an offer tobuy outthecompany.
"It's a mismanaged company," said a former executive. "A 1.75 million sq ft commercial building in thePanveltownship is 75% complete. It could easily fetchRs500crore."
Hirco, listed on the London Stock Exchange's Alternative Investment Market, was set up in 2006 to invest in residential andcommercialcomplexes.
On June27,chairman David Burton said in the company's half-yearly statement that progress on the developments appearedsomewhatsubduedwith only moderate progress in the last six months. The company had said in its annual financial statement in September 2012 that the completion of both the Chennai andPanvel projects remained atleast a decade away.
"While information flow on the projects remainsunsatisfactory and we have no real clarity over who is really in control of the projects, what does seem clear is that completion will needsubstantialfurther investmentof bothequity andlongertermdebt," Burton hadsaid. Infra problems, title disputes plague affordable homes on city's fringes
Mumbai: The affordable homes market, thriving on the outer fringes of Mumbai, is beset with problems like lack of infrastructure, poor transport connectivity, issues of land titles and delayed clearances.
In 2008, many developers who rode the real estate boom by catering mainly to high-income buyers started enticing lower and middle class clients with smaller properties outside Mumbai limits when the market slowed down. These locations are 60 to over 100 km from Mumbai. But they claimed to have registered brisk sales of smaller flats in places like Boisar, Virar, Panvel, Kalyan, Shahpur, Ambivali and Karjat. These homes cost anywhere from Rs 10 lakh to Rs 35 lakh.
But despite frenzied construction in these far-flung places, problems soon arose. Buyers realized that in several of these locations, there was barely any social infrastructure like schools, markets, hospitals and restaurants. Some projects are located 8-10 km from the nearest railway station. Builders too found that permissions from local civic bodies were inordinately delayed.
In Vasind near Shahpur, Tata Housing had to scrap one of its affordable homes projects because environmental clearances got stuck in red tape. In Karjat, only phase I of a large low-cost project by Tanaji Malusare City was completed. The remaining phases have failed to take off despite a huge initial demand.
Experts said that despite the slowdown in the property market, demand for affordable homes is eight to ten times more than luxury apartments. Shubhankar Mitra, head, strategic consulting (west), Jones Lang LaSalle India, said, "Anticipated supply in this segment is 50,000 to 60,000 tenements. Most of the supply comes from grade B and C developers offering flats in the range of Rs 2,500 to Rs 3,500 a sq ft."
"Infrastructure is not adequate. This pushes up the cost, making the project unviable for many developers," added Mitra.
Concurred Pankaj Kapoor of Liases Foras, a property research firm, "Locations like Panvel still lack the livability factor. You require human mass for infrastructure to come up and this may take another decade."
He said the affordable homes market is relatively better than the luxury one. "Sales to inventory ratio is higher than the luxury segment. The current stock of expensive flats will take at least 100 months to sell. The affordable ones have an inventory of about 30 months, although ideally it should be about 11 months," he added.
Builder Nayan Shah of Mayfair Housing, which builds luxury apartments in suburban Mumbai, branched out into the affordable sector a few years ago with a project in Virar. "There is good demand from people who want to sell their tenements in Mumbai and move to a larger, cheaper home further away from the city," he said.
Developer Nayan Bheda of Neptune Group blamed the government for not promoting affordable housing. "Permissions don't come in time and there is little support from the local municipality," he said.
1,000 flats have been sold in the 1,000cr Hirco township in Panvel
Hirco's 2012 financial statement said the Panvel and Chennai projects will take at least 10 years
Despite frenzied construction in farflung places like Virar and Shahpur, there is barely any social infrastructure in like schools, markets, hospitals and restaurantsin several areas
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