MMRDA plots a high price

Rising interest rates and non-performing realty stock prices could have started to dampen the property market in the city, but the Mumbai Metropolitan Region Development Authority (MMRDA) is not convinced.

The MMRDA on Friday set the real estate market abuzz by demanding bids over the reserve (minimum) price of Rs18,000 per sqft (psf) — the price it got last year — for a commercial plot it has put in the market.

The plot is near ICICI Towers at the Bandra-Kurla Complex (BKC), and it has a development potential of one lakh sqft.

The reserve price is the indicator of the prevailing property rates. In 2006, TCG Urban Infrastructure Holdings had bought a plot at BKC for Rs18,000 psf, which was the highest value it had received since the real estate boom of 1995.

Real estate consultants are not surprised by the reserve price and believe the bids could even touch Rs20,000 psf. The reason: unmatched levels of demand and supply for office space.

Sanjay Dutt, deputy managing director of global real estate consultants Cushman and Wakefield, says, “One would even be able to capitalise in this booming market and get higher rentals if the successful bidder is able to make the project viable in two years.

After this period, a lot of supply (about 2 million sqft of commercial space currently under construction) may hit the market at BKC.’’ About 3.5 million square foot of commercial space under construction on mill lands in Central Mumbai is expected to hit the market in the next 12 months. The price would not make difference to a successful bidder if it were a multinational.