Dharavi Redevelopment Project update

The project to redevelop one of the largest slums of Asia, Dharavi, in the heart of Mumbai has generated considerable interest among realty developers and major contractors as around 20 entities and their joint venture partners attended the pre-bid meeting, said two persons with direct knowledge of the development.

The pre-bid meeting was conducted by Dharavi Redevelopment Project that falls under the purview of the Slum Rehabilitation Authority. The project will be awarded to the entity that bids above the base price of ₹3,150 crore.

The selected lead partner is expected to form a special purpose vehicle with its own contribution of 80% equity worth ₹400 crore, while the government of Maharashtra will infuse ₹100 crore to hold 20% equity in this venture.

After nearly 15 years of deliberations and three attempts to redevelop Dharavi, the government of Maharashtra has invited global tenders last month to kick-start the process. The tenders for bidding will be available between November 28 and December 28, which is also the last date for submission of the bids.

The interest shown during the pre-bid meeting is contrary to the experts’ concern that the current liquidity crisis may hold back realty developers from coming forward to take up this large-scale and complex project spread across 593 acres.

Apart from equity worth ₹400 crore, any further investment needed for the project will be brought in by the lead partner in the form of compulsorily convertible instruments, including debentures and preference shares.

This SPV will be responsible for constructing free housing for eligible slum dwellers and occupants including amenities and infrastructure as per the terms stipulated by the state government.

In lieu of this, the SPV will be entitled to construct the free sale area to sell in the open market. The project will get FSI, or permissible development rights, of four times.

The Maharashtra government has notified the entire Dharavi as a notified area and appointed the Slum Rehabilitation Authority as a special planning body.

The earlier plan was to divide Dharavi into five sectors. As per the old plan, MHADA was to redevelop one of the sectors and four others were to be redeveloped through private participation. However, the plan did not make much headway.

No comments: