Launched in different times, when global capital was rushing into the financial capital in response to an ever-burgeoning demand for well-appointed commercial spaces and deluxe housing, that is now precisely the problem with the Dharavi Redevelopment Project: Its success hinges on investments by a now-shortlisted group of 19 consortiums of developers, including realty majors from across the world. When the first advertisements were issued last June, in newspapers from Vancouver and Los Angeles to Dubai and Bangalore, and until the expressions of interest came in a flood last August, Mumbai’s real estate market ¿ and the global economic situation ¿ were significantly different.

“In a different market, there would not have been any fears,” said MHADA vice-president and CEO, Gautam Chatterjee, also officer on special duty for the Dharavi Redevelopment Project, admitting that the liquidity crisis has led to several queries and requests for some sweetening of the proposed deal from the bidders.

“The bidders have expressed reservations on some of the conditions ¿ for example, a bank guarantee for 10 per cent of the project cost and an upfront payment of 10 per cent of the premium amount they quote,” Chatterjee said.

For now, he said, officials have advised each of the 19 consortia to remain active participants in the process and present their design masterplans to government officials and an expert committee next month, regardless of whether they choose to place a financial bid later.

Needless to say, when the project moves into the financial bidding phase, there would be stiff negotiations on the conditions, which now weigh severely against the builders. “With the total project cost now estimated at Rs 15,000 crore, ten per cent of the project cost for each of the five sectors is about Rs 300 crore. Who will raise that sort of credit now?” asks a representative for one of the firms in the fray. “Then there is the cost of building not just the commercial spaces, apartment blocks and the tenements for rehabilitating existing slumdwellers, but also developing schools, hospitals, fire stations, etc.”

... contd.