INDIA BUSINESS WORLD - MAY 2006
THE MONTH THAT WAS...

UNITECH CUTS NATION'S TOP REALTY DEAL IN NOIDA

 THE largest deal in the recent history of Indian real estate was sealed on Tuesday with Unitech quoting a winning Rs 1,582 crore for 340 acres of land in Noida. The only other bidder, DLF, had offered Rs 1,401 crore for the prime piece of land earmarked for housing units.

Both bids for the project, christened Express City, were far higher than the reserve price of Rs 788 crore. The largest real estate transaction in recent memory has been Reliance Industries' Rs 1,104.11-crore purchase of a 7.5-acre plot at the Bandra-Kurla Complex in Mumbai.

Interestingly, the trendsetting deal comes at a time when the capital market is just recovering from a major slide which had caused apprehensions about an adverse impact on real estate prices. The deal is likely to propel the low-profile Unitech into limelight as it has outbid DLF, which is in the midst of a major blitz for its IPO.

The bid price of Unitech translates roughly into Rs 11,520 per sq metre compared to Rs 10,200 offered by DLF. The deal is likely to set new benchmark for real estate transactions. The Rs 1,100-crore Unitech plans to build exclusive villas in the 340 acres, 50% of which has to be reserved for greenery. The prized piece of land is located across sectors 96, 97, 98 of Noida.

Unitech managing director Sanjay Chandra confirmed to ET that his company has become the highest bidder for the Noida land. “We understand that Unitech is the highest bidder in the tender. At Unitech, we strive for the highest standard of quality, working with some of the most renowned architects and partners in the world. Our past experience in the development of world-class infrastructure and building capabilities will help us to contribute towards making Noida a truly global township,” he said.

Initially, three players were in the race for the coveted project but the technical bid of Bangalore-based Icity Infrastructure did not qualify. Therefore, the financial bids of Unitech and DLF were opened on Tuesday. Speaking to ET, Noida Authority CEO Sanjiv Saran said this is likely to be the biggest land auction in the country, both in terms of spread and valuation. As per the master plan only 50% of the area can be used for residential purpose while the remaining has to be devoted for creation of open spaces, schools, colleges, shopping complex, and hospitals. The difference between the two bids, at Rs 181 core, is not too wide and this is considered an indication that the developers have assessed the land value at a realistic level. “It is a win-win situation for the UP government as well as the developer. The state government gets Rs 1,582 crore and the developer will also benefit since the project is profitable,” said Colliers International India chairman Akshy Kumar. “The market is bullish and demand is high. Therefore, the prices quoted are not unusually high,” he added.

Industry analysts note the project will have a major impact on supply of high-end dwelling units in the area, setting a new benchmark for premium properties.

The Express City project was originally conceived as NRI City project and a tender was floated two years ago. However, the project did not take off at that stage and it went into cold storage. The Noida authority then revived it as Express City and fresh bids were submitted last month.