DLF Ltd, the country’s largest real estate developer by market capitalisation, has changed its earlier plan of building an IT special economic zone (SEZ) in Delhi and will instead use the land to construct a business park to free up liquidity.
The company has applied to the commerce ministry for denotification of the 25-acre plot and is expected to receive the approval in a month’s time.
As per the regulations, if the developer hasn’t started construction on the notified plot, it can cancel the deal and forego tax benefits associated with SEZs.
The plot, which DLF bought from Sriram Industries, is 5 km from Delhi’s commercial hub Connaught Place.
DLF has decided to build a commercial office space for immediate sale instead of term leases to beat liquidity crunch. A DLF spokesperson told DNA Money, “Given the current situation, we assume the lease model for that plot would be less beneficial compared with outright sale, which will give us better valuation and lumpsum cash.”
The spokesperson confirmed that the company has changed its plan and has applied for denotification of the land. A developer of SEZ usually leases out units in the construction for a maximum of 10 years. But some developers demand long-term leases - typically of 99 years on the lines of government land auctions. The upfront lease amount is usually the current valuation of the property.
DLF is also bidding for the Rail Land Development Authority (RLDA) land in Bandra (east) in Mumbai, with a floor price of Rs 3,960 crore for an 80-year lease.
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