MIAL appoints consultant for realty project

Putting the development of its 200-acre real estate space on the fast track, Mumbai International Airport Limited (MIAL) has appointed hospitality consultants HVS Hospitality Services to look for potential bidders as well as study the market feasibility for the project.

The consultant is to submit its report by the first week of August, on the basis of which MIAL would call for bids from companies for the project.

MIAL, which is currently modernising the Mumbai airport, is a joint venture between a consortium of GVK Group, Airports Company South Africa and Bidvest, and the government-owned Airports Authority of India (AAI)

“The consultant appointed for advisory and strategic consultancy for hospitality and mixed landuse development is HVS Hospitality Services. The contract has already been processed on April 13, 2009. The assignment is to begin from May 5, 2009,” said an MIAL spokesperson in response to an e-mail from Business Standard.

“The time duration for the entire assignment is 4 months starting from May 5, 2009. The report will primarily focus on market analysis and recommendation of development strategy,” he added.

The 200 acres of land will be developed in various stages. The spokesperson, however, did not specify whether like the Delhi model, a special purpose vehicle would be formed for the project or refundable deposits would be taken from the developers.

“Our options on formation of an SPV or otherwise to do this development are open at this stage,” said the e-mail from the MIAL spokesperson.

In a proposal made to the civil aviation ministry last year, MIAL had said that due to the downturn in the economy as well as the real estate sector, the project would garner only Rs 1,000 crore going by the prevailing market conditions, which along with the shortfall in air traffic would create a gap of Rs 2,000 crore.

As a result, the ministry had allowed MIAL to raise Rs 1,543 crore in four years by levying an airport development fees (ADF) of Rs 100 and Rs 600 from domestic and international passengers, respectively.

While that approval was given on the basis of estimates for the real estate project, MIAL will have to give an overall cost estimate by September this year.

The Delhi airport was the first one in the country to call for bids to develop a chunk of 45 acres in its hospitality district. The project ran into rough weather — first with the civil aviation ministry turning down its financing model over the question of revenue sharing with the government and then because of a bleak response from real estate companies, wherein the security deposits to be given to DIAL on the land fell short of their estimates, and thus created a gap in funding of the airport modernisation.

In April, DIAL was finally able to award six of the total of 13 plots to five companies after persuading them to give higher security deposits for the land.