Again, There are No Takers for Dharavi Redevelopment
Tough eligibility norms blamed for builders’ lack of interest, deadline for submission of bids extended for the second time in past 20 days
Mumbai: The state government’s ambitious project to redevelop Asia’s largest slum Dharavi spread over 240 hectares in the heart of the country’s commercial capital Mumbai failed to elicit any response from developers. The poor show has forced the authority to postpone the bid submission deadline for the second time in the last 20 days.
The nodal agency for the project, Dharavi Redevelopment Project Authority, had earlier set April 7 as the last date for submission of bids for the project estimated to be worth around .₹ 22,000 crore. Given the cold response, the deadline was extended to Wednesday April 20, and now stands postponed to May 5.
According to industry experts, tough eligibility conditions including networth, turnover and work experience, among others have kept builders away. “It was expected to be this way given the current market scenario and most importantly eligibility conditions do not seem to be in sync with the reality,” said one of the entity that had attended prebid meeting last month.
This is the second attempt by the state government to kick start the redevelopment of Dharavi abutting business district Bandra-Kurla Complex. In its first effort in 2007, government had received around 14 developers’ responses at Expressions of Interest stage. However, seven out of these interested entities later backed out and the bids were cancelled altogether in 2011.
Calls and text message to Dharavi redevelopment project chief executive officer Nirmal Kumar Deshmukh remained unanswered.
Limited consumption of generated Floor Space Index due to height restriction, payment of stamp duty charges for development agreement, overall sluggish market and concerns over vacating the slums have also been cited to the weak response to the mega project.
Developers are allowed to form consortiums to bid for the project and each consortium can have maximum three partners. The conditions set for eligible bidders include any of these three partners to have completed a .₹ 4,460-crore single project in the past seven years. If not, then two of these partners need to have completed .₹ 2,790 crore projects each or three of them are required to have finished projects worth .₹ 2,230 crore each during these seven years.
Additionally, the developer is expected to have finished redevelopment of 1,000 slums or 600 slums each by two partners or 500 slums each by three partners forming consortium.
Cumulative turnover of three partners for the past three years needs to be more than .₹ 1,680 crore. The consortium’s minimum networth is required to be .₹ 1,450 crore. Among other conditions, the bidding consortium is also expected to furnish bank guarantee worth .₹ 280 crore.
Additionally, despite efforts to attract global participation to redevelop the slum, no international entity has so far shown interest or submitted bids for the project. “No international entity attended the pre-bidding meetings that took place earlier this year, while no real estate developer has been able to rope in any global partner for the alliance,” said a consultant that advised one of the developers. Dharavi Redevelopment Project Authority had floated global tenders to redevelop four of the five sectors of the slum in January. The total development of Dharavi will be divided in five sectors. Of these, four sectors spread over 440 acres will be redeveloped by private developers, while the fifth sector spread over 66 acres by the Maharashtra Housing and Area Development Authority (MHADA).
The bids are for redevelopment of nearly 75% of the slum through public-private partnership, as originally mooted nearly 12 years ago. As per the plan, the residents of sector I are expected to get 405 sq ft apartments each based on the size of their current houses, while the rest of the slum dwellers would get houses of 350 sq ft size. In the revised attempt this time, each sector is expected to be redeveloped by a developer to be selected by the authority through the process.
The bids are for redevelopment of nearly 75% of the slum through publicprivate partnership