Orbit Corporation, a Mumbai-based real estate player, is struggling to find a buyer for its 2.5 lakh sq ft commercial development Hafeez Contractor House in Lower Parel, Mumbai.
Developer’s talks for a Rs 600-crore deal with Kotak Realty Fund called off
MUMBAI: Orbit Corporation, a Mumbai-based real estate player, is struggling to find a buyer for its 2.5 lakh sq ft commercial development Hafeez Contractor House in Lower Parel, Mumbai.
Earlier, Kotak Realty Fund was in talks with Orbit to buy the property for Rs 600 crore but talks eventually fell through. Confirming this, Orbit’s chief financial officer Ramashriya Yadav said fresh deals were being analysed. “We are planning to pre-sell the property by the second quarter of 2008. The Kotak deal has been called off,” he told DNA Money.
This is the second time that the Hafeez Contractor House has lost a potential buyer. Last year, Orbit came close to selling the property to Sajjan Jindal Group companies JSW Steel and JSW Power Trading for Rs 360 crore. However, the deal came apart due to Orbit’s high expectations.
Later, in September 2007, JSW Steel, JSW Power Trading and JSW Investments bought Orbit’s commercial office space in Kalina in suburban Mumbai for Rs 807 crore.
The Hafeez Contractor House, with the capacity to house 500 offices, is now under construction and will be completed in two years’ time. The property is located in south Mumbai’s Lower Parel area, which is fast emerging as a commercial hub.
According to a Lehman Brothers report, Lower Parel is expected to get as much as 5 million sq ft of office space in the next two years. This could cause prices to soften in this region. Till January, Lower Parel was commanding Rs 28,000 to Rs 31,000 per sq ft for prime office space. However, after the slowdown, the rate has fallen by about Rs 5,000 per sq ft, said an analyst from a brokerage firm.
An official close to the development, requesting anonymity, told DNA Money that Orbit was keen on pre-selling the Hafeez Contractor House to ensure smooth cash flows for its current projects. “By the time this project is ready, Lower Parel will be flooded by other developments. Orbit wants a headstart on others,” the official said.
The developer is also planning three premium beachfront townships. The first of these would come up at Mandwa, 15 minutes by sea from South Mumbai. The deal has been signed and the township, which will include a five-star hotel and a spa, is under construction. Manori and Madh Island in Mumbai are the sites for the other two townships.
pooja_s@dnaindia.net
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