Lavasa & Aamby Valley: 2 of India’s largest ever real estate projects have defaulted

Words being used to describe 2 of India’s largest ever "entire new large scale city" real estate projects are “hell on earth” and “ghost town”.

Saddled with a rapidly declining real estate transactions as well as prices, dozens of large Indian developers have gone bankrupt across India. While more than 10 million houses remain unsold across India, and rising.

Lavasa project was launched in 2008 in Pune, India (near Mumbai) and sold as a replica of Portofino city of Italy.

At 100 square kilometres, it was going to be one of the largest cities in India to be built in one go from scratch.

It was the brainchild of billionaire, Ajit Gulabchand, of Hindustan Construction Company. Shares of this company are down 90% so far over the last few years.

The best architects in the world (HOK from USA), Golf course by Nick Faldo (world famous golfer), schools on international level, Manchester City branded football academy, multiple hotels, Oxford University affiliation, residences, health and wellness centres, all were planned.

Today in 2018, it is a shattered dream, with decaying unfinished structures and the billionaire is facing bankruptcy.

Second project of Aamby Valley (also near Mumbai in Lonavala) built by infamous bankrupt billionaire, Subroto Roy, also faces a similar dilemma. 

He has spent several months in jail, lost his hotel empire in London and NY. Now he is going to lose control over this township and be declared bankrupt shortly thereafter.

Launched also in 2008, it was planned to be 43 square kilometres in size.

After building a few hundred units and some buildings, entire project has halted since several years.

Current status of both projects:

1.    Lavasa: They defaulted last month on their debt to banks and on loans.

2.    Aamby Valley: Supreme Court of India has asked liquidators to sell the property with reserve price at one third of valuation. Since they cannot find a bidder since last year for the entire project, the project will be sold in pieces. 

Sad part is that many areas across India are facing the same crisis of ghost townships. Here is a sample from New Delhi.

Real estate lessons from the ghost societies of Greater Noida

Hubris, greed, over leveraging, not having a good business model, inability to forecast demand accurately, falling prices, over promising etc all come to mind.

Let’s hope investors can find solace wherever they live instead of where they had dreamed to live!

References:

Lavasa: Indian billionaire’s paradise has now become a hell on earth

Saddled by bad loans, India's first 'private hill city' turns into 'ghost town'

Sahara case: Once a place for India's richest to unwind, Amby Valley is now deserted

Aamby Valley auction to go on, but Supreme Court also mulls sale of shares