New Delhi / Mumbai: Nearly two years after it proposed a plan to lease land for development of hotels on 45 acres on New Delhi’s Indira Gandhi International Airport land, the airport’s operator, Delhi International Airport Ltd, or DIAL, has been able to lease out 17 acres to five developers.
Bidding out: The Indira Gandhi International Airport in New Delhi. Winning firms are expected to start construction in two months. Amit Bhargava / Bloomberg
The deal will potentially land DIAL at least Rs765 crore over the length of the lease period, a senior executive at one of the winning bidders estimated. A spokesman for the company, a joint venture led by GMR Infrastructure Ltd, declined details. It was not immediately clear how long the leases would run.
Winning bidders to leases include hotel and travel groups such as Accor, InterGlobe Hotels, Lemon Tree, Bird Group’s Dusit Thani brand and Hyatt (RS Saraf Juniper Hotels), DIAL said in a statement on Monday, but did not specify the timelines.
The land lease bid, when first proposed in May 2007, ran into controversy with DIAL proposing a plan that would have seen it raising at least Rs2,835 crore in refundable deposits for 28 years and a licence fee that would be determined through bidding to realty and hospitality firms.
But after this plan ran into resistance with the government, the airport operator came up with a revised plan that saw it dividing the 45 acres into 13 parcels ranging from 1.6-7.7 acres.
According to a government official, who asked not to be identified, DIAL has now structured the lease payments into an annual licence fee with a 5.5% annual escalation clause and a one-time development cost of Rs15 crore an acre towards the maintenance of roads, and a security deposit that is three times the annual licence fee for 57 years.
The lease fee and security deposit will amount to about Rs30 crore an acre, the senior executive at one of the winning bidders quoted earlier, said. “In a depressed market where people are not willing to invest, (DIAL has) been able to do fairly well,” this executive said.
The government had approved bids for six of the 13 parcels. “The six bids were good (price) which was therefore approved by the board while the other seven bids are to be reviewed,” a second government official said, asking not to be named.
DIAL has until 31 August to report to the aviation ministry on the amount it has been able to realize through land development. The airport operator had taken permission from the ministry to levy a passenger fee to fill an estimated gap by Rs1,827 crore over three years.
This could now be reviewed if the amount realized from realty leases exceeds earlier expectations.
A second senior DIAL executive, on condition of anonymity, said the winning hotel companies are expected to start construction activities in two months and would complete the project within two years. Up to 2,000 rooms can come up in the existing land.
Shares of GMR Infrastructure lost 5.48% to Rs94.05 on Monday on the Bombay Stock Exchange, whose bourse shed 4.78%.