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Following the success of the Rs 40.5-billion (Rs 4,050 crore) Wadala land deal in central Mumbai, at least three government agencies are planning to sell plots worth at least Rs 60 billion (Rs 6,000 crore) in the next two months.
Government-owned entities such as National Textile Corporation, Mumbai Metropolitan Region Development Authority and Railway Land Development Authority have either initiated or hastened the process to sell land to cash in on the revival of interest for big-ticket deals.
In the largest ever land deal in the country, the Lodha Group, city-based developer, yesterday picked up a six-acre plot in Wadala. NTC on Wednesday said that it wanted to sell land in Bharat Textile Mills, Worli, in central Mumbai.
Also, MMRDA extended the date for submission of proposals for the development of an inter-state bus terminal in the same locality.
Earlier, the agency failed to get any bid for the proposed ISBT. Friday was the last day for bids.
MMRDA also plans to float tenders for another commercial plot at the tony Bandra Kurla Complex, which has 14,500 sq mt (156,000 sq ft). The land is expected to fetch around Rs 4 billion (Rs 400 crore).
Earlier this year, the agency had to put off auction for the plot, as it did not receive a single bid. Realtors had then said the reserve price of Rs 3 lakh per sq mt fixed by MMRDA was way too high. The agency also plans to auction more plots across the city to raise resources for funding infrastructure projects.
BETTING ON POSITIVE SENTIMENTS
NTC, with several defunct textile mills in Mumbai, has plans to put nine mills on the block in the coming months. The mills have around 90 acres. It plans to sell two mills (10 acres) in central Mumbai in the next one month. The corporation today put out advertisements for the eight-acre land in Bharat Textile Mill, with a base reserve price of around Rs 7.5 billion (Rs 750 cr).
It was also planning to float a tender for Poddar Processors Textile Mill, also in Worli, a source privy to the plans said. It hopes to raise another Rs 2.5 billion (Rs 250 crore) through this sale. Over the last few years, NTC sold off property in unviable mills in central Mumbai, once a textile hub, to generate resources for the modernisation and revival of units that are financially viable.
"Tuesday's auction (Wadala) augurs well for our plans. It shows that demand is back for good properties. We will float request for proposals within a month," said an official at RLDA, which is trying to sell a Rs 4,000-crore land lot in Bandra. The agency had failed thrice to sell the plot.
SVR Srinivas, additional metropolitan commissioner, MMDRA, feels financial modelling and payment schedules are crucial for the success of land auctions. "Markets responded positively to changes we have done in Wadala auction," he said.
Besides, by lowering the reserve price and increasing permissible construction, MMRDA allowed the developer to pay the bid amount over a five-year period, instead of mandating payment in one-shot. The Wadala plot, which went under the hammer yesterday, was originally earmarked for commercial activity, with a 102-storied complex planned, but MMRDA had to change course due to absence of interest from developers.
Property consultants and analysts say government agencies will continue to sell land plots, given the kind of response they have got.
"Positive response to this bid should trigger new land supply through mill lands, mainly in South and Central Mumbai that could cool the skyrocketing prices," Religare Capital Markets analysts said in a report.
Adds Akshaya Kumar, chief executive of Parklane Property Advisors: "But, prices will depend on demand and supply equation, given the kind of supply going to come in the next 24-36 months in central Mumbai."
