In 2006, the real-estate industry was bullish about information technology park (ITP) and special economic zone (SEZ) projects. In the economic boom of 2007, developers were selling properties at prices as high as Rs30,000 per sq ft. And now amid the gloom of 2008-09, those very same developers are looking to sell off the land banks they had acquired during 2006–2007.
“Developers who had acquired a lot of land for developing SEZ projects across India, including the periphery of Mumbai, are now trying to sell off the lands as it is difficult to get approvals,” said Pranay Vakil, chairman of real-estate consulting firm Knight Frank India.
“Eighty per cent of the (proposed) SEZ projects are not able to get approvals; and a few of them who have got approvals, are not getting buyers. Builders in Mumbai and Delhi have a lot of inventories in the IT parks-SEZ segment,” concurs Pankaj Kapoor, founder and chief executive officer of property research firm Liases Foras.
The total land granted by the government for SEZ development is67,680 hectares, of which about 109 approvals (for 20,853 hectares of land) are for State-run industrial development corporations or State-government ventures. During 2007, the Government had notified 270 SEZ projects covering 314 sq km of land. The Government has given formal approval to 531 SEZ proposals which will cover approximately 676 sq km. Of these 531 proposals, only 98 are functional SEZs, of which only 11 are multi-product SEZs.
“In Delhi, the developers had acquired huge land banks to develop projects over a period of 10 years or more. Some of these lands are agricultural lands which the developers want to offload right now,” said Mr Vakil of Knight Frank.
In Andhra Pradesh, 103 SEZ projects got formal approval, of which four got ‘in principle’ approval and 68 projects have been notified. In Kerala, 24 SEZ projects got formal approval, no project got ‘in principle’ approval and 11 projects have been notified. In Maharashtra, 111 projects got formal approval, 36 have got ‘in principal’ approval and 55 have been notified. In Uttar Pradesh, 34projects got formal approval, five have got ‘in principal’ approvals and 16 projects have been notified.
Mumbai has154 million sq ft of proposed IT projects, of which 28 million sq ft of land is ready and under construction, in places like Thane and Navi Mumbai. Projects planned in Navi Mumbai cover 94 million sq ft, but this area witnessed land sales of only 3 lakh sq in the first quarter (April-June 2009) of the current fiscal.
Delhi has 69 million sq ft reserved for proposed IT projects, of which projects covering 23 million sq ft are ready or under construction.