DDA, Reddy stand by Emaar bailout decision

The Delhi Development Authority (DDA) has rubbished claims that it had incurred losses on the Rs 700-crore bailout given to Emaar-MGF in 2009 by purchasing 333 flats, at the Commonwealth Games Village, while Union Minister for Urban Development Jaipal Reddy said the DDA will actually make a profit of more than Rs 350 crore from the same.

?When DDA accepted the price of Rs 11,000 per square feet, the prevailing rate of the developer for booking of the flats was Rs 13,500 per sq ft. In fact, if the flats are sold at the prevailing rates, DDA would gain substantially,? DDA said in a statement.

The DDA also said that current market value of the flats was Rs 18,000 per sq ft.

?The cost may further go up by the end of December 2010 when flats will be actually available for sale/occupancy.?

The DDA said the Ministry of Urban Development was also taken into confidence while arriving at the Rs 11,000-per sq ft rate. The DDA said it considered various options, including filing a legal suit against the developer if it failed to adhere to the strict guidelines, before agreeing to a bailout.

?In view of the time constraint, it was not possible to find a new developer or develop the project on our own. Granting a loan was also not possible as DDA could not secure any mortgage from the developer. Thus, the DDA was left with no alternative except to go in for a straight purchase of flats. A conscious decision of the same was taken at the highest level,? the statement said.

To find out the exact value of the flats, the DDA constituted a valuation committee with representatives from the Central Public Works Department, National Buildings Construction Corporation, Housing and Urban Development Corporation and the DDA.

?The committee with the assistance of technical and financial experts recommended that the purchase price could be fixed between Rs 9,382 and Rs 9,720 per sq ft,? it said.

Meanwhile, Jaipal Reddy told a news channel: “Though I was not consulted, I would still stand by the buyback scheme.”

He said it was a desperate arrangement, but fortunately, DDA will make a profit of more than Rs 350 crore, a return of 50% in a year.