New Delhi: The Delhi Development Authority, or DDA, will purchase 333 flats for around Rs700 crore in the Commonwealth Games Village in an effort to bail out cash-strapped real estate developer Emaar MGF Land Ltd. The firm is developing the village, scheduled for completion by the end of 2010
In a statement on Monday, DDA said it would buy the flats at Rs11,000 per sq. ft, which is below the rate being charged by Emaar from open market buyers. Currently, Emaar has priced the flats at around Rs12,500 per sq. ft. Emaar MGF is developing the project in partnership with DDA.
Bailout: The site of the Commonwealth Games Village in New Delhi. Emaar MGF, which is developing the project in partnership with DDA, has been unable to sell the flats according to plan. Rajkumar / Mint
Of the total 1,168 flats, Emaar MGF was supposed to sell 768 flats at market rates in late 2011 and the rest were to be sold by DDA after the games at lower prices. Emaar MGF was to fund the construction through the sale of flats. Bookings opened in 2008.
The firm has so far sold around 260 flats.
The amount towards the cost of the apartments will be released in instalments and has been linked to various stages of completion of flats, the statement said.
“The DDA’s decision to invest in the Games Village is a very positive development,” an Emaar MGF spokesperson said.
According to the DDA statement, due to non-sale of flats, Emaar MGF had asked DDA for a loan of Rs1,000 crore. However, it added, at no point had DDA agreed to a loan.
Earlier, a committee consisting of officials from the Central Public Works Department, Housing and Urban Development Corp. Ltd, National Buildings Construction Corporation Ltd and DDA was formed to decide on the bailout package to be given to Emaar. Subsequently, DDA has decided to buy flats rather than give a loan.