Delhi Development Authority's hopes of raking in Rs2,600 crore through the auction of 10 hotel plots crashed yesterday. A single bidder turned up and paid just 0.5 per cent more than the reserve price to seal a victory, reports CNBC-TV18.
Ahead of the 2012 Commonwealth Games, the Delhi Development Authority put on auction 10 plots in the east and north of the capital for construction of hotels. But suprisingly, just one bidder turned up and nine plots remain unsold.
This is despite the fact that the DDA is willing to allow developers to use 20 per cent of the area for commercial use. The single deal was done at a price just 0.5 per cent higher than the reserve prices of Rs48 crore.
"We were able to sell only one plot in Mangalam Place in Rohini. We are trying to analyse the reasons why this happened," said Nimo Dhar, director, public relations, DDA.
While the DDA may look into the reason for this dismal auction, the auctions in the recent past also leave a lot to be desired. In June this year, the DDA managed to collect Rs465 crore by auctioning four out of nine hotel sites. This worked out to a gain of less than Rs 100 crore over the reserve price of Rs348 crore.
'For these locations, DDA should not expect such kind of reserve prices,' said Anshuman Magazine, managing director, South Asia, C B Richard Ellis.
Real estate players say that the high reserve price is not the only spoiler. They claim DDA is not releasing plots of the size that would interest developers of a budget or three star hotel.
They say the location of these plots would not interest luxury or business travellers and hence developers looking at five stars would choose to pass. The unsuccessful auction may force DDA to lower reserve prices and maybe even re look at plot sizes.