This is the first time since 1995 that the MMRDA has failed to find a buyer for its plots.
MUMBAI: In the clearest sign yet of the property market heading for a correction, the Mumbai Metropolitan Region Development Authority (MMRDA) on Tuesday received zero bids for two of the five plots it had put on the block at the Bandra Kurla Complex (BKC).
It received only one bid for a commercial plot and 18 bids from nine developers for two residential plots.
This is the first time since 1995 that the MMRDA has failed to find a buyer for its plots. Slumping global markets coupled with the fluctuating stock market and high property prices are said to have deterred buyers.
One of the unsold plots was reserved for commercial use while the other was reserved for a clubhouse with gymnasia and sport activities.
Starlight Systems, an associate company of Suntek Piramal Realty, paid Rs32,680 per sq ft for two residential plots with a built-up area of 7,050 sq m each. This is the highest rate paid for a residential plot at BKC and three times the reserve price of Rs1.02 lakh per sq m fixed by the MMRDA. The agency fixes its reserve price on the basis of the highest rate it receives at an earlier land sale.
Starlight had purchased a residential plot from MMRDA by paying the then highest rate of Rs1.02 lakh a sq m in 2006.
The company is now constructing Signature Island, a luxurious apartment building where it has fixed the selling rate at over Rs35,000 a sq ft.
Jet Airways was the sole bidder for a commercial plot. The company paid Rs826 crore, or Rs3,44,448 a sq m, for the plot admeasuring 5,951.99 sq m. Since this plot carries an FSI of 4, the rate paid by Jet for the 24,000 sq m it can develop works out to Rs31,769 a sq ft. The company paid about 15 per cent higher than the reserve price of Rs3 lakh per sq m.
Interestingly, the reserve price fixed by the agency for today’s auction was less than the price of Rs5.04 lakh it received for a 16,500 sq m plot in November 2007. Wadhwa Developers had bagged the plot by paying an astounding Rs47,000 a sq ft.
Asked about the lower reserve price, MMRDA joint commissioner Milind Mhaiskar said it reflects the price the agency achieved in the earlier bid. “It is a competitive rate looking at the demand-supply situation in the commercial sector,” he said. “Also, the reserve price of Rs3 lakh per sq m is double the price we had fixed earlier.”
Real estate experts were shocked by the rates paid by Starlight. “It is too high,” said a consultant, who did not want to be identified. “Being a predominantly office location, BKC is deserted after work.
Also, if you add Rs3,000 as the construction cost plus interest on funds during the development period, the rate comes to Rs36,000 a sq ft. Will the company be able to find buyers at Rs45,000 a sq ft in an area which does not have any social infrastructure like cinema houses and clubs?”
Kamal Khetan, chairman, Suntek Group, disagreed. “These plots are adjoining Signature Island, which I am developing currently,” he said. “The total area when all plots are combined comes to four acres and all of them face the main road, which makes my property lucrative. In fact, I have sold 20 flats to top corporations at about Rs45,000 a sq ft. It is a good deal for me.”
m_rajshri@dnaindia.net
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