The Uttar Pradesh government is considering to bring co-development policy to revive stuck projects in Noida and Greater Noida, people aware of the development said.
The government is already doing a pilot project where realty developer Hawelia Group has taken over a 22-acre partially delivered project Shree Radha Sky Garden in Greater Noida where the new developer will deliver over 2,000 flats.
The developer will also clear Rs 175 crore dues of Greater Noida authority, about Rs 63 crore of construction finance, Rs 20 crore to the vendors among other payments.
The company will need to invest another Rs 450 crore for the completion of the project.
“We had proposed to overtake four projects, of which the state government asked us to do a pilot on one project. With the co-development policy, the new developer will be able to raise funds from the market, which was not possible in the management model,” said Nikhil Hawelia, Managing Director, Hawelia Group.
The Noida and Greater Noida authority are expected to approve the proposal in the upcoming board meeting, paving way for revival of more stuck projects.
“Hawelia Group executed the only MOU with the Government of Uttar Pradesh during the UP Global Investment Summit 2023 for investment and resolution of stalled projects. There are many such projects which need revival and with the right policy, homebuyers can finally get the home they had booked decade ago,” Nikhil Hawelia said.
According to the Confederation of Real Estate Developers’ Associations of India (CREDAI) 190,000 units worth Rs 1 lakh crore are stuck in Noida, Greater Noida and Ghaziabad. In Greater Noida alone, at least 36 real estate projects are facing insolvency proceedings.
In the Greater Noida project, while about 2.5 million sq ft has been delivered by the existing developer, another one million sq ft, which was launched but not completed, will be delivered by the new builder and there is a scope for another 2 million sq ft of development.
“The current selling price in the project is Rs 3,500- 3,800 per sq ft while in the area the price is Rs 6,000 sq ft. After entering the project and doing the basic work, we will be able to revise the rate and make the project viable,” he said.
Hawelia group is also settling RERA cases filed by the buyers and even buying back the properties.
It is estimated that Rs 40,000 crore is due to the Noida, Greater Noida, and Yamuna Expressway authorities, including premium, interest, and penal interest against allotted plots on which real estate projects are in different stages of execution.
So far, other builders have undertaken projects only under contractual or debt management model without taking any financial, legal and authority liabilities and responsibility on them.
The legacy stalled projects have been majorly identified in the Noida and Greater Noida region in last about 7-10 years.
Till now, the fate of such projects have only been addressed either at NCLT, under Section-8 of RERA Act, 2016 or at some other legal remedial platforms.
Under the co-development policy, the new developer could raise debt for financial closure of such projects on its net worth and credit ratings as the promoters which are already under default do not have the required credit ratings to raise debt for completion of such stalled projects.