Many Sahara realty projects stuck, experts pessimistic

Eight months after Lucknow-based Sahara group announced the launch of 10 townships and said it would follow these with another 58 housing projects in the current financial year, work on the 10 sites in the tier-II and tier-III cities is moving at a snail’s pace.

According to sources in the group, it is yet to give the detailed project report to the authorities in respective states where it has launched those projects.

The group has acquired many land parcels for the 58 new projects but is yet to launch these, according to sources.

In June 2012, Sahara Infrastructure and Housing, real estate arm of Sahara India Pariwar, launched the 10 townships at a gala event called ‘Shubh Aagaman’ on the occasion of Sahara chief Subrata Roy’s birthday in Lucknow and followed it up with similar functions at all its 10 sites.

Of the 10, nine are lifestyle housing projects branded ‘Sahara City Homes’, while one premium housing project is called ‘Sahara Grace’.

It also said that at eight places its projects were under construction. In all, Sahara said it would have 76 housing projects in 2012-13.

On February 13, capital markets regulator Securities and Exchange Board of India (Sebi) asked banks to freeze accounts and seize properties of two other Sahara group companies, Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) for defying Supreme Court’s orders to refund 24,000 crore (Rs 240 billion) to its investors.

Bankers’ take

According to bankers and real estate experts, following the Sebi order, the group may find it difficult to raise funds for its realty projects from banks and buyers.

While affordable homes are priced at 5-15 lakh (Rs 500,000 - Rs 1.5 million), prices of other flats range from 16 lakh to 52 lakh (Rs 1.6-5.2 million). The booking amount is 10 per cent of the total cost.

The ‘Sahara City Homes’ integrated townships were planned in Pune, Aurangabad, Jodhpur, Gwalior, Bareilly, Solapur, Porbandar, Katni and Kashipur, while ‘Sahara Grace’ was coming up in Cuttack-Bhubaneshwar.

Spread on 900 acres, the 10 projects were to offer 25,000 residential units with world-class amenities.

But for various reasons, the company is yet to start construction on many of the sites.

For instance, in Pune, the company has not started the piling work and the plot is just barren.

“When I approached them a week ago, the sales team said they do not have brochures and pamphlets as they have run out of stock,”

said a prospective buyer from Pune. Many realty brokers in the city said they no longer worked with the company on the project.

Even realty brokers in cities such as Aurangabad, Porbandar, Jodhpur, Gwalior, Bareilly and Solapur said the projects in those cities were not making much progress.

When contacted, Abhijit Sarkar, head of corporate communications at Sahara India Parivar, said that development and construction work had begun on all the 10 sites.

Sahara, he said, had 18 live projects, of which eight are in advanced stages of construction.

Around 1,000 keys were given to customers in these projects and the group aims to hand over 2,000 more this year. “More projects will be launched in 2013 and the balance will follow in the next two to three years,” Sarkar said.

He claimed the company has never failed to meet its assurances, adding that there had been delays because of hindrances in getting government approvals or compact land parcels.

“Our plans remain on track and our aim undeterred. The real estate business will continue to be one of the group’s prime focuses,” he said.

A senior public sector banker said, “I don’t think we will be comfortable in lending to Sahara projects. Promoters will be choked after attachment of the accounts. Therefore, we will also not like to put our money.”

He added that even if a particular project has a clear title, it’s not prudent to lend to the project as there are so many uncertainties around the company.

The Sebi order might also prompt buyers to ask for refund from the company in its existing projects, said the head of a Delhi-based global property consultant.

Sarkar said that the group’s customers continued to show good faith in them. “In turn, we are committed to fulfilling our promises to them and our year-on-year sales growth is testimony to that.”

He also downplayed the impact of the Sebi order on its relationship with banks. “Our association with banks has never been in question. Most of the established and popular banks from the private and public sector offer loans to our customers. This shows their continued trust in Sahara,” he said.

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