DLF, India’s biggest realtor according to market capitalisation, has delayed its Mumbai projects, including development of a mill property at Lower Parel and a hotel project, as a severe downturn puts the real estate sector in distress.

According to sources, the retail-cum-entertainment centre at Mumbai Mills property, which marked DLF’s entry into the financial capital three years ago, has been delayed by two years. The project, announced in June 2005 and slated to be completed in December 2009, is still at the excavation stage.

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DLF chairman KP Singh said two days ago that the company had deferred some of its commercial, retail and hospitality projects.

A source said, “The Lower Parel project is now delayed by two more years and DLF is paying the backlog cost very dearly. Even its hospitality project at Prabhadevi (Dadar) has been delayed.”

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A spokesman for DLF, however, said, “We are not going to defer any commercial project, which has already been pre-leased, or housing projects where money has already been taken from buyers.”

Regarding the Lower Parel project, he said, “We are going to develop this property as high-end commercial and retail project and if we give any timeline it would be very speculative. The project’s plans have changed from its earlier projection to include retail with commercial office space.”

Ramesh Sanka, CFO, DLF, had told DNA Money in October this year that the Lower Parel project would be completed by December 2009. The company expects to generate average rental of more than Rs 200 per sq ft, including the rentals for its mall. The Lower Parel property was being developed by Jawala Real Estate Pvt Ltd, a subsidiary of DLF Retail Developers Ltd, the retail wing group of flagship DLF Universal Ltd.

Sources said DLF’s five-star hospitality project in central Mumbai, which it is developing through a joint venture with Mumbai-based Akruti City, has also been delayed. According to them, DLF will now take up the hospitality venture, planned on an area of 5 lakh sq ft, only if it is able to strike a private equity deal and get an advance.

Vimal Shah, managing director, Akruti City had told DNA Money in June, “The total cost of the project is estimated at Rs 2,000 crore and construction would begin by November this year.”

Sources said the project was a part of DLF’s deal with Hilton Hotels to develop 75 hotels pan-India. DLF, however, denied that the Mumbai hotel project was part of the Hilton venture.

The hospitality JV with Akruti is for developing commercial and hospitality projects across the city through various special purpose vehicles. DLF holds 66% stake in it, while Akruti holds the rest.

The DLF-Akruti JV is also developing a commercial project on slum area.

The first project, coming up at Andheri MIDC, was to be handed over by the first quarter of calendar 2009, but will now be delayed. DLF holds 75% in the Andheri MIDC project, with Akruti holding the rest.

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