MUMBAI // Emaar MGF is working around the clock to ensure that its US$300 million (Dh1.1 billion) Commonwealth Games Village project in Delhi is finished on time. More than 7,000 labourers are crammed around the 34 towers on the 11-hectare site, living in a makeshift village on its fringes and toiling day and night to complete the project by the deadline of March next year.
"Logistics-wise, this is one of the most challenging projects which may exist in this country," said Sanjay Malhotra, the chief operating officer of Emaar MGF, the Dubai property giant's Indian joint venture. "There's very little free space for labour camps and the storage yards." Just a few months ago, however, the site was almost deserted. Sales of the site's 1,168 apartments had dried up as India's property market crashed and Emaar MGF, already facing a cash crunch after being forced to drop plans to raise money on Mumbai's stock exchanges at the start of last year, found itself unable to pay its lead contractor, Ahluwalia Contracts.
When arrears of more than $20m built up, Ahluwalia stopped paying its workers, many of whom then left. At the lowest ebb in March and April, there were just 1,500 workers on the site, and, with Ahluwalia also unable to buy cement and steel, work came to a standstill. For Emaar MGF, however, missing its deadline was never an option. Failing to deliver would be a public relations disaster. The project will house the 8,000 athletes coming to the Commonwealth Games in Delhi in October next year. The Melbourne Commonwealth Games in 2006 were watched by 1.8 billion people.
The Delhi Development Authority came to the company's aid in May, buying 333 additional flats for 7bn rupees (Dh524m), a discount of more than 12 per cent. Mr Malhotra is now busily increasing the number of workers on the site, keeping them working at night, and using multiple sub-contactors simultaneously. "If I may use an analogy from a game of cricket, the 'asking rate' has kept going up. A lot of work which could have been finished earlier got postponed to a later date, so we now have to concentrate and finish that work in the limited time that's available," he said.
The number of workers on site has already returned to its pre-crunch level of 7,000, but Mr Malhotra aims to ramp this up to 9,000 over the next few months. "We were in a very peculiar situation," Mr Malhotra said. Builders of most other residential developments could delay construction until the market recovered and buyers returned. But with the project tied in to the Commonwealth Games, "irrespective of sales to customers, we still had to build it".
"The project was always, right from the beginning, on a very tight timeline," Mr Malhotra added. "That is, I guess, why most of the other bidders did not go forward for it." When Emaar MGF launched the first set of flats in June last year, it sold 80 per cent of the apartments it had on offer. But by January, interest had dried up. "Sales had dipped to almost negligible levels," he says. Today, the company's three smart show apartments are once again packed. "Weekends are really, really hectic here," said an executive at the site.
Emaar MGF has seen similar revivals across its business. "We've sold 2,000 apartments in the last two months," Mr Malhotra said. At the end of last month, the company launched the $82m Windermere Estates project in the north-eastern city of Shillong, its first new residential project since June last year. Emaar MGF is once again appointing banks to renew plans to list on the stock exchanges in Mumbai.
It now has just 140 apartments of its original 790 in the Commonwealth Village left to sell. Even without offering discounts on the launch prices, which ranged from $370,000 to $1m for an apartment, it expects few problems. The development could sell on location alone. It is just across the Yamuna River from Delhi's central business district, with fields and open countryside to one side, the elaborately carved new Akshardham temple on the other, and its own station on the Delhi Metro.
Emaar MGF should now avoid the harsh financial penalties written into the contract for missing the deadline, but it will not likely be able to claim the financial incentives offered for early delivery. Moreover, as the remaining flats start to sell more quickly, Emaar MGF may begin to regret the 12 per cent discount it gave the development authority, which will end up costing it about $20m. For Mr Malhotra, failing to deliver is still not impossible. "We will of course try our best to meet the deadline, which is very, very tight, very aggressive. So far we are on track. Right now, I cannot predict."