Emaar MGF gets Rs 500-cr govt loan to complete Games village
In a first ever financial bailout package for a real estate company, the central government has agreed to extend a loan of Rs 500 crore to Delhi-based realty firm Emaar MGF to help it complete the prestigious Commonwealth Games village on schedule...
By Rajat Guha & Sanjeev Choudhary, ET Bureau |
NEW DELHI: In a first ever financial bailout package for a real estate company, the central government has agreed to extend a loan of Rs 500 crore to Delhi-based realty firm Emaar MGF to help it complete the prestigious Commonwealth Games village on schedule.
Delhi Development Authority (DDA), a government agency which had given out the contract to Emaar MGF to build the games village, will extend the loan. The government decided to give the loan after the realty firm expressed inability to complete the project in time due to financial strains. The Games are scheduled for October 2010 in the national Capital and the deadline to complete the project is April 2010. Construction has reached midway with less than one year remaining to complete the project.
���Emaar MGF had asked the DDA for a loan of Rs 800 crore for completion of the athlete village. But the government has decided to lend them only Rs 500 crore,��� said a top official at the urban development ministry, which oversees the workings of DDA.
The loan would carry an interest rate of 12-13% and will be backed by apartments in the residential project as collateral. The government had earlier rejected the realty firm���s proposal to buy 250 flats at the village, located on the bank of Yamuna in east Delhi.
Over four months ago, Emaar MGF, a joint venture between Dubai-based property giant Emaar and Delhi-based MGF, had sought financial assistance from DDA saying it wouldn���t be able to complete the project on its own. The company
had requested DDA to buy its apartments or give loan.
But an Emaar MGF spokeswoman said the company is yet to hear a final word from the government on the financial assistance and has received no money so far. The urban development ministry official said even though the decision to lend money to the realty firm has been taken, the government was waiting for the general elections to get over to release the fund.
The apartments in the athlete village have a price tag between Rs 1.8 crore and Rs 4.8 crore at an average rate of Rs 13,000 per sqft. The company had priced the project aggressively in the backdrop of a realty boom, good location and premium facilities. But a sharp correction in the realty market and general deterioration in the economy impacted sales at the project and even prompted several buyers to default on payment of installments.
Emaar MGF had bid Rs 321 crore to bag the Commonwealth Games village project in 2007. The project involves building 1,168 apartments to accommodate 8,500 athletes. Under the agreement, Emaar MGF has to hand over one-third of the apartments free of cost to DDA and can sell the balance.
Delhi Development Authority (DDA), a government agency which had given out the contract to Emaar MGF to build the games village, will extend the loan. The government decided to give the loan after the realty firm expressed inability to complete the project in time due to financial strains. The Games are scheduled for October 2010 in the national Capital and the deadline to complete the project is April 2010. Construction has reached midway with less than one year remaining to complete the project.
���Emaar MGF had asked the DDA for a loan of Rs 800 crore for completion of the athlete village. But the government has decided to lend them only Rs 500 crore,��� said a top official at the urban development ministry, which oversees the workings of DDA.
The loan would carry an interest rate of 12-13% and will be backed by apartments in the residential project as collateral. The government had earlier rejected the realty firm���s proposal to buy 250 flats at the village, located on the bank of Yamuna in east Delhi.
Over four months ago, Emaar MGF, a joint venture between Dubai-based property giant Emaar and Delhi-based MGF, had sought financial assistance from DDA saying it wouldn���t be able to complete the project on its own. The company
had requested DDA to buy its apartments or give loan.
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Over a month ago, following a preliminary assessment, DDA had decided to extend an immediate loan of Rs 100 crore to Emaar MGF so that project construction continues unhindered. The amount of financial assistance has now been raised to Rs 500 crore after a panel set up by DDA on the matter gave its final report last month.But an Emaar MGF spokeswoman said the company is yet to hear a final word from the government on the financial assistance and has received no money so far. The urban development ministry official said even though the decision to lend money to the realty firm has been taken, the government was waiting for the general elections to get over to release the fund.
The apartments in the athlete village have a price tag between Rs 1.8 crore and Rs 4.8 crore at an average rate of Rs 13,000 per sqft. The company had priced the project aggressively in the backdrop of a realty boom, good location and premium facilities. But a sharp correction in the realty market and general deterioration in the economy impacted sales at the project and even prompted several buyers to default on payment of installments.
Emaar MGF had bid Rs 321 crore to bag the Commonwealth Games village project in 2007. The project involves building 1,168 apartments to accommodate 8,500 athletes. Under the agreement, Emaar MGF has to hand over one-third of the apartments free of cost to DDA and can sell the balance.
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