About two years after the first Indian Grand Prix motor race was organised, realty group Jaypee stares at losing the right to host the much-sought-after Formula One (F1) race in Greater Noida. The F1 management might terminate mid-way its five-year contract, which ends in 2015, over taxation issues.
Formula One chief, Bernie Ecclestone, told Reuters the Indian Grand Prix was likely to be dropped from next year’s F1 calendar due to political reasons.
“Is India going to happen next year? Probably not,” he said at the Hungarian Grand Prix. Asked why, Ecclestone replied: “The reason is very political.”
Ecclestone draws up the annual calendar and usually presents it to the governing International Automobile Federation for approval in September.
$400 mn: Jaypee Group invested about $200 mn in building the track, besides making other expenses of $200 mn
2011: The maiden Indian Grand Prix was organised and followed up with the second edition the next year. In 2013, the tournament is scheduled for October 27
2015: Jaypee’s five-year agreement with F1 board ends
Rs 90,000 crore: Estimated revenues from the F1 grand prix in India over 10 years (according to a 2011 report)
1.5 mn: Job opportunities estimated to be created by the event for technical workers over 10 years
Jaypee Group had organised the first grand prix at Buddh International Circuit, Greater Noida, in 2011, and the second the next year. The third edition, the 16th round of the 19-race championship, is scheduled for October 27. Both the races in India have been won by Red Bull’s triple world champion, Sebastian Vettel.
A Jaypee Group spokesperson said: “We have not received anything in writing from the Formula One management on the status of the 2014 Indian Grand Prix. But our agreement is up to 2015 and we are keen to host F1 till that period. We are also keen to sort it out.”
According to people tracking the development, there have been issues over high local taxation, which is not the case in most other countries.
Since the opening of the F1 stadium, property developers have been launching projects around it and hardselling “proximity to the track” to potential buyers. Even the nearby Yamuna Expressway has seen a flurry of launches and prices have zoomed in many areas because of F1.
However, Monday’s development might impact the property prices in the region.
“This is bad news — not only for real estate but in general. There will be some impact on property prices. But F1 was not the sole reason for the realty market in the region,” said JLL real estate research head, Ashutosh Limaye.
He said though developers were marketing F1 as the unique selling point and expected a premium for it, not many (buyers) would have bought property there because of F1 alone.
Another person tracking the sector said there would be limited impact on property prices where projects had been sold off.
Some developers' margins might get strained as they were selling projects around it with PLC (preferential location charges), wherein buyers paid extra to get a specific location.
Reuters quoted Vicky Chandhok, chief of Federation of Motor Sports Club of India, as saying: "I work closely with both, Jaypee Group and Bernie. Apparently, they are trying to find a mutually convenient date to start early in the year in 2015." Vicky Chandhok is the father of Indian racing driver Karun.
"With that in mind, 2014 obviously doesn't make logical sense and nobody can afford to have a late start in 2014 and then host another grand prix in early 2015. I think they are trying to find a solution to run 2015 early in the year, instead of late in 2014," Chandhok said, adding both Ecclestone and Jaypee wanted to continue their association.