The government’s construction and engineering arm - National Buildings Construction Corporation (NBCC) - has started evaluating the feasibility of completing the 27 unfinished Jaypee Group projects. NBCC sees enough “potential” to raise money from the unsold inventory in these projects and the vacant land parcels mortgaged by the embattled builder to banks, say sources.
“We have started unofficial discussions with banks who have lent to Jaypee Infratech, the government and the developer and are trying to arrive at a viable business model to take it up. There is potential. It is a huge business opportunity but the challenge is how to manage the project,” sources said.
Some homebuyers have paid almost 95 per cent of the cost of the units. Money to complete the project is, therefore, to be raised from the project. “There is possibility of raising money to complete the project from unsold inventory available in the project and monetising the unused land banks along Noida Expressway and Yamuna Expressway,” they said.
“Once all the unfinished projects with almost 40,000 units are completed and people actually move in and occupy their flats, once it becomes habitable, it will go a long way in improving valuations of unused land parcels in the area and in that respect it makes a lot of business sense to complete the project first. But all depends on what the developer, banks have to offer to us. Informal business parleys are on,” they said, adding “the cost of construction of unfinished projects is yet to be ascertained,” the sources said.
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Experts say that this could be one way in which all stuck up real estate projects can get completed and buyers who have invested their life savings and waited for over eight years can get their homes. Banks too would be willing to put in money (last mile equity) if the government’s arm decides to step in through its construction arm to complete the projects as there is a trust deficit in the market.
Jaypee homebuyers had written to the authorities, seeking help of state-owned companies like Housing and Urban Development Corporation Ltd (HUDCO) and NBCC Ltd, to step in and complete the pending projects.
As many as 40,000 homebuyers, who have invested in Jaypee projects, have been waiting for over eight years to get their homes delivered and have been worried about their investments, especially after the National Company Law Tribunal (NCLT) admitted IDBI Bank’s plea for initiating insolvency proceedings against Jaypee Infratech for defaulting on a Rs 526-crore loan earlier last month. NCLT appointed insolvency professional Anuj Jain as the CEO of Jaypee Infratech. He was given six months to revive the company.
Also Read: Jaypee Infra insolvency: Can homebuyers get relief under RERA?
Earlier this week, the Supreme Court stayed the insolvency proceedings against Jaypee Infratech, ruling in favour of a petition filed by homebuyers. Flat-buyers had contended before the court that they will neither get a home nor a refund of their hard earned money on account of being "unsecured creditors". A day later IDBI Bank urged the Supreme Court to lift the stay order on insolvency proceedings against the real estate developer, saying the move would not benefit home buyers. The next hearing is set for September 11.
This week, the NCLT also ordered the initiation of insolvency proceedings against another builder - Amrapali's Silicon City on a plea from Bank of Baroda and appointed Rajesh Samson of Deloitte as the Insolvency Resolution Professional to take control of the company. As many as 3,000 homebuyers who are against the move have decided to follow in the footsteps of Jaypee buyers and are planning to move Supreme Court.
Last month, Confederation of Real Estate Developers' Associations of India (CREDAI), an apex body of private real estate developers, had offered its support to be part of the resolution process involving unfinished projects by Amrapali Group in which over 45,000 homebuyers have invested their hard-earned savings. This proposal was made by Credai members during a meeting with three ministers appointed by the Uttar Pradesh state cabinet, which was also attended by other real estate developers active in the Noida region.
Vandana.ramnani@nw18.com
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