The country’s first smart city project being built in Gujarat is on the roll. With the first phase of the ambitious Rs 81,000 crore project currently underway, the management of the Gujarat International Finance Tec-City — popularly known as GIFT city project — have decided to launch Phase-II of the project after the Vibrant Gujarat summit 2015.
The second phase will cost about Rs 7696 crore — which is four times more than the project cost of Phase-I — and will involve an area that will be double the size of 10 million square feet that was targetted to be developed during the first phase.
“We will be launching Phase-II of the project in 2015-16 fiscal. We have got a tremendous response for the Phase-I of the project (costing Rs 1818 crore), where we have already sold land development rights to the tune of 12 million square feet, which is more than our target of 10 million square feet. In the next three months of the current fiscal, we expect to sell another 3-4 million square feet of space within the GIFT city project,” said Ramakant K Jha, MD & Group CEO of Gujarat International Finance Tec-City Company Ltd (GIFTCL), that operates and manages the project being developed in Gandhinagar, about 30 kilometers from the city here.
According to officials associated with GIFT city, the project conceived in 2007 by the then Gujarat chief minister Narendra Modi is expected to get a big push during the Vibrant Gujarat summit 2015. The authorities have planned to showcase the project before a global audience during the second day of summit on January 12, 2015. Jha however did not comment on the number of MoUs which are expected to be signed with GIFT city during the event.
The second phase of development which is expected to kick in after the Vibrant Gujarat summit will involve a development of 22 million square feet, which is more than double of Phase-I. “We have made considerable progress during the last three years,” says Jha. However, most of the progress in form of financial support and investments have flowed into the project after Modi became the Prime Minister; the latest being BSE Brokers’ Forum (an association of brokers of Bombay Stock Exchange) taking up 4.5 lakh square feet of space with the project.
“Earlier, people were not sure if the project will take off. But now with PM Modi promoting smart cities across the country, a lot of bankers and investors have become interested in the project,” Jha said.
During the Phase-I of the project, GIFTCL sold land development rights at the rate of Rs 5500 per square feet which is less than the Rs 7500-8000 per square feet of commercial property sold in Ahmedabad. “Our maintenance costs are also less. We charge just Rs 5 per square feet every year as maintaenance, compared to Rs 70 charged for similar specifications in Ahmedabad,” he added.
The first phase of the project has been largely been funded with a debt of Rs 1157 crore, which has been sourced as loans from a consortium of banks. “We got this loan at an interest rate of 11.5 percent. No bank will give you a rate that is below 12 percent,” Jha remarked. The rest of the money has come in form of equity (Rs 65 crore) and internal accruals (Rs 596 crore).