Bangalore: Close to two years after Dubai-based real estate company Limitless Llc. unveiled its India plans, its maiden venture in the country—the Rs24,000 crore Bidadi township project near Bangalore—is stuck.
The 50:50 joint venture (JV) between Limitless and DLF Ltd, India’s largest publicly traded builder that is implementing the project, has threatened to pull out because the state government has failed to acquire land for it.
This makes the future of Limitless—an affiliate of property developer Nakheel PJSC and part of state-owned port and container terminal operator DP World—uncertain in India.
Liquidity constraints: The Madinat Jumeirah resort in Dubai, one of the projects being developed by Nakheel PSJC and Limitless. Karim Sahib / AFP
If the JV falls through, the Dubai firm, that currently has only this project here, would have to start afresh and explore new options, the company admitted on Wednesday.
“This is a setback for us and we are taking steps. Limitless and DLF have together notified the government that they are reconsidering their position on the project,” Rebecca Rees, manager, corporate media relations, Limitless, said by email.
Pankaj Renjhen, managing director of Jones Lang LaSalle Meghraj, a property advisory, said the future of Limitless would depend on its financials: “The Dubai real estate scene is not positive at all and in times like this, Limitless would do well only if they have separate funds allocated for India and is committed to invest and develop in India.”
Back home, dwindling sales and liquidity constraints have stalled a few projects of Nakheel and Limitless, which are developing properties in West Asia such as the Palm Jumeirah, The World and Jumeirah Islands. Rees, however, said: “We would look at different projects moving on from here though nothing has been finalized so far. We, however, remain optimistic about India as a future market, and will continue to explore viable opportunities there.”
An analyst at a real estate advisory who didn’t wish to be identified, said Limitless has been trying to find its ground in India but the only deal it had was the DLF joint venture to develop Bidadi.
The company was also in talks with the Hinduja Group for developing health care properties, but nothing came about, this person added.
Meanwhile, Dharavi Development Authority in Mumbai received a letter last month from local builder Akruti City Ltd, saying that Limitless wants to pull out of a JV to redevelop Asia’s largest slum.
Hemant Shah, managing director of Akruti, was unavailable for comment on Friday. The Akruti-Limitless consortium was a shortlisted bidder for the project.
Both DLF and Limitless have complained that after 15 months of signing an agreement that says the government is responsible for acquiring the land on the Bangalore-Mysore highway, 30km from the state capital, no progress has been made on this front.
Limitless had signed the venture with DLF in October 2007 for the 9,000-acre, mixed-use township. Construction was to begin in early 2008.
Last Saturday, after announcing the company’s third quarter results, vice-chairman Rajiv Singh, said DLF has invested Rs400 crore in the project. On being asked whether the project would take off, Singh said, “I would be happy (if it did).” DLF Group executive director Rajeev Talwar declined comment when contacted on Wednesday.
The firm has written to the state government asking it to return the Rs400 crore.
Karnataka’s law and parliamentary affairs minister Suresh Kumar, who also has additional charge of urban development, said: “They want the Rs400 crore back. DLF is cash-strapped and is now asking for more concessions. From our side, we have given all clearances and have shown the green signal.” But he didn’t clarify whether land for the project has been acquired.
Last Saturday, DLF reported a 68.72% decline in net profit to Rs670.79 crore for the third quarter ended December.
In the next two trading sessions, its share price fell 25% to a low of Rs131.50. Its market capitalization now is Rs22,600 crore, only one-tenth of what its market value was a little over a year ago.