Dharavi Slum Redevelopment: DLF, Adani Realty And Shree Naman Developers In Final Race For Rs 20000 Crore Project

Dharavi Slum Redevelopment: DLF, Adani Realty And Shree Naman Developers In Final Race For Rs 20000 Crore Project

by India Infrahub - Nov 17, 2022 03:46 PM +05:30 IST
Dharavi Slum Redevelopment: DLF, Adani Realty And Shree Naman Developers In Final Race For Rs 20000 Crore ProjectSRA Slum Redevelopment Project
Snapshot
  • Adani Group, Delhi-based DLF Group, and city-based Naman Group have submitted bids for the ₹20,000-crore Dharavi redevelopment project,

Three domestic players - Adani Properties, DLF, and Shree Naman Developers - have submitted for Dharavi Redevelopment Project, that seeks to transform Asia’s second-largest slum cluster.

The bids are opened on Wednesday (Nov 16) to reveal the names of the firms and their bidding amounts. The bids will then be scrutinised based on technical and financial eligibility.

The state government will complete the bidding process by the end of the year, and the chosen developer will get seven years to see the work through, including rehabilitating more than 56,000 families.

During the pre-bid meetings, eight companies had evinced interest in taking up the project.

“All three have bid independently, without any joint venture with an overseas company,” said SVR Srinivas, Chief Executive Officer, Dharavi Redevelopment Project.

In 2018, the Adani Group consortium had placed a Rs 4,529 crore bid for the project when the previous BJP-Shiv Sena government was pursuing the project aggressively but it was Dubai-based Seclink Technology Corporation that emerged as the highest bidder at Rs 7,200 crore. The tender was however cancelled by the Uddhav Thackrey-led Maharashtra Vikas Aghadi (MVA) government

Started as the luxury residential and commercial property arm of the conglomerate in 2010, Adani Realty have been developing residential, commercial and social club projects of over 64 lac sq. mtrs. (69 million sq. ft. approx) in cities like Ahmedabad, Mumbai, Gurgaon, Kochi and Mundra. It forayed in to Mumbai real estate market in 2014 with Western Heights project in Andheri. 

Adani Realty has three other high end projects in Mumbai, which include an ongoing site at Ghatkopar, one each in the westerns suburbs and in central Mumbai, 

Started almost three decades ago, Shree Naman Group has completed several residential and commercial projects, including Naman Residency in Bandra Kurla Complex and Naman Midtown at Elphinstone Road.

DLF Group is one of the leading real estate developers in India and one of the largest listed real estate companies with a footprint in 15 states and 24 cities.

Renewed Push By Shinde-Fadnavis Government

On Oct 1, the Maharashtra government floated a global tender for the redevelopment of Asia's biggest slum, Dharavi, spread over 240 hectares of prime land in the heart of the country's commercial capital Mumbai. The project is estimated to cost Rs 20,000 crores.

In September this year, the Maharashtra cabinet headed by Chief Minister Eknath Shinde on Wednesday (Sep 21) approved fresh global bids for the Dharavi Redevelopment Project (DPR) and offered additional benefits for the ambitious urban renewal project.

Terms Of Redevelopment

The slum redevelopment project needs to be undertaken by a joint venture in which the selected developer is expected to hold 80% equity (estimated to be Rs 400 crore, while the state government will hold 20% with Rs 100 crore equity capital).

Apart from the equity of Rs 400 crore, any investment required for the project shall be brought by the lead partner in the form of instruments such as Compulsorily Convertible Debentures and/or Compulsorily Convertible Preference Shares, as the state government has mandated.

The tender criteria also require that bidders should have a consolidated net worth of Rs 20,000 crore and Rs 2,000 crore, respectively.

The state government has so far notified about 240 hectares for the Dharavi slum redevelopment.

The state government has also approved a floor space index (FSI) of four and an additional fungible FSI available as per the prevailing development control regulations (DCR) for rehabilitation, renewal component, and free sale built-up area in the open market.

Each slum owner will be entitled to a minimum of 405 sq. ft. unit of carpet area.

Project History

Originally mooted in 1999 by the first BJP-Sena coalition government, the proposed slum redevelopment project has languished for decades due to various challenges. In 2004, the then chief minister Vilasrao Deshmukh announced the Dharavi revamp project, which he claimed, would transform the lives of residents by shifting them from the slum to plush apartments. However, his government struggled to operationalise the plan announced with much fanfare.

In 2012, the then Congress-NCP government handed over the responsibility to redevelop Sector 5 of the slum cluster to the Maharashtra Housing Area Development Authority (MHADA). However, there was not much progress after the announcement.

The project received fresh impetus in Oct 2018 when the BJP-Shiv Sena government led by then Chief Minister Devendra Fadnavis approved the setting up of a Special Purpose Vehicle (SPV). The SPV was envisaged to be formed with the developer holding an 80 per cent equity stake and the government owning the remaining stake.

In Nov 2018, the BJP-Shiv Sena government invited global tenders to redevelop Dharavi, one of the largest slums in Asia, into an integrated township as part of the Rs 22,000 crore project.

Unlike the phased approach envisaged in earlier attempts to get the project off the ground, the 2018 plan permitted the whole area to be considered for redevelopment. The expected cost of rehabilitation was estimated at Rs 22,000 crore, and over one lakh structures were planned to be constructed in seven years. The state government also persuaded the Railways to give up 90 acres of land in Matunga and Dadar for the project.

Under the 2018 plan, 70,000 residential and 30,000 commercial or industrial establishments were proposed to be constructed in Dharavi over seven years. It was also proposed that the tenants who have existing structures of 300 sq. ft will get flats with 350 sq. ft carpet area, while those in slums with 350 sq. ft but less than 500 sq. ft will get flats of 400 sq. ft carpet area after redevelopment; likewise, those living in slums in a 500 sq. ft area, will get flats of the equivalent area; and the latter will also be offered an additional 35 per cent fungible Floor Space Index (FSI).

In late 2019, Sealink, a United Arab Emirates-based firm, was selected as the developer for the redevelopment. However, the regime change in Maharashtra after the split between pre-poll allies BJP and Shiv Sena delayed the project further.

In Oct 2020, the Uddhav Thackrey-led Maharashtra Vikas Aghadi (MVA) government cancelled the tender and said new tenders would be floated soon. The MVA government claimed that one of the reasons for calling off the tender was the delay by the Centre in transferring the railway land, which was critical for the project.

With the ouster of the MVA government and Shinde-Fadnavis in the saddle, the project has gained momentum again.

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