DLF, India's biggest real estate developer, is likely to pull out of its Rs 1,000 crore (Rs 10 billion) Infopark project in Bhubaneshwar which was to be developed over 54 acres in an approved special economic zone for information technology projects.
The company, which has already taken possession of land for the project -- it was inaugurated just two months ago -- is facing a cash crunch amid the prevailing economic downturn, which has slackened the demand for commercial real estate projects.
A source close to the development said DLF was unlikely to go ahead with the project as its cash position was not comfortable and it did not expect many takers for the project due to the economic downturn.
The company was exploring the option of seeking an extension of about two years for the project but was more in favour of pulling out, he added.
DLF had already paid the entire deposit of Rs 15 lakh (Rs 1.5 million) an acre for the project. In the event of withdrawal, it will forfeit Rs 8 crore (Rs 80 million).
When asked by Business Standard, a DLF official said, "We don't comment on anything being speculated in the market. DLF's Infopark project is on track and we expect to commence construction soon."
DLF Infopark was to be developed in three phases. It is to comprise an IT block, a luxury hotel, a retail chain, service apartments and recreational facilities, with a total built-up space of about 5.5 million sq ft. For the luxury hotel, DLF has tied up with Hilton, an international hotel chain.
In the first phase, it committed an investment of Rs 300 crore (Rs 3 billion) for developing an IT workspace of international standards, with a built-up area of 5.7 lakh sq ft.
The first phase was scheduled to be operational within 18 months to two years of the start of the construction.
The Infopark project was to generate direct and indirect job opportunities for over 40,000 people in sectors like IT and ITes (IT-enabled services), retail and hospitality.