Mumbai: In yet another sign that the real estate market has cooled, a land auction at business hub Bandra-Kurla Complex on Thursday fetched Rs1.55 lakh per sq. metre—half the price from the previous auction in March.
Ahmedabad-based Talim Research Foundation, a venture of Subhash Chandra’s Essel Group of Industries, was the sole bidder, paying Rs92 crore, only Rs2 crore over the minimum sale price.
Just five months ago, Jet Airways (India) Ltd picked up a plot in the same area at Rs3.52 lakh per sq. metre.
The latest auction comes as land sales have shrunk in a tight realty market and developers have stayed away from land purchase.
The Mumbai Metropolitan Region Development Authority, or MMRDA, had no choice but to award the 5,900 sq. m to the lone bidder in Talim. The plot would be used for an educational facility by the nine-year old foundation which does social science research with a focus on health, communication, micro-economics, social audit and poll studies.
In March, only three out of five plots were sold in a land auction by MMRDA when Jet Airways picked up a plot and Starlite Systems Pvt. Ltd bought two residential plots at the same price.
Land sales have been down since this year’s beginning compared to 2007, when city-based Wadhwa Group had bought a commercial plot in the complex at a staggering Rs5.04 lakh per sq. m for a 16,500 sq. metre plot.
Even Starlite and Jet Airways that bid for the plots in March have requested MMRDA to give them an extension of six months to pay the premium.
Anuj Puri, country head of property consultancy Jones Lang LaSalle Meghraj, said few land transactions have taken place in Mumbai in the last six months—though there hasn’t been any substantial correction in prices.
“Developers are not willing to pay astronomical prices for a piece of land and are waiting and watching for some correction to happen,” he said. “Many developers are also under a liquidity crunch which is why they are staying away from land purchase.”
Hemant Shah, chairman of city-based builder Akruti City Ltd, said it has not bought any land this year. “Despite the slowdown, land prices are still high and sales have been considerably low. Developers who have bought land at astronomical prices last year have not been able to launch projects,” he said. “We have decided not to go for any land buying under these circumstances.”