Navi Mumbai land auction prices rise, more to follow

Navi Mumbai land auction prices rise, more to follow

Bangalore: The sale of two land parcels by City and Industrial Development Corp. of Maharashtra Ltd (Cidco) in Navi Mumbai has fetched higher prices than three months ago, signalling a revival of interest in a market that has largely been frozen since mid-2008.

A 5,000 sq. m plot in Kharghar was sold through tender on Friday at Rs75,515 per sq. m, more than the Rs68,000 per sq. m that Piramal Sunteck Realty Pvt. Ltd paid in a Cidco land sale in August. The other plot, of 1,500 sq. m, also in Kharghar was sold at Rs61,000 per sq. m, higher than the current market price by Rs5,000-7,000 per sq. m.

“Like property prices, land prices have also risen in the past three months, though they still haven’t reached the 2007-early 2008 peak levels. Land sales are still slow but demand has returned," said Mohan Ninawe, Cidco spokesperson.

According to the official, land prices that crashed by nearly 60% in the past one year have gone up 20-25% in the recent two-three months. Land prices started cooling down from mid-2008, when both land and home sales slowed and developers, struck by a credit crunch, stalled expansion and land-buying plans.

State-owned bodies, such as National Textile Corp. Ltd (NTC) and the Mumbai Metropolitan Region Development Authority (MMRDA), which failed to sell land parcels in the past few months, even at reduced prices, are firming up new sale plans for the next few months.

“There is always interest for such land sales, but there is also a need to unlock the huge amount of land which belongs to government bodies to make valuations become reasonable," said Akshaya Kumar, CEO of Parklane Property Advisors.

NTC intends to sell textile mill land estimated at around Rs4,000 crore in a phased manner in cities such as Kanpur, Indore and Mumbai. Nine mills, located on an estimated 100 acres, are in Mumbai alone.

In its only attempt at land sales this year, NTC had tried to dispose of the 10.4 acre Finlay Mill in central Mumbai for a reserve price of Rs710 crore but cancelled it twice because it wasn’t satisfied with the bids.

Lodha Developers Ltd, which had raised its bid to Rs710 crore from Rs657 crore to qualify, filed a petition in the Delhi high court, which has stayed NTC from issuing fresh tenders for the property. That hasn’t deterred NTC from being aggressive on the pricing front. “We are ready with the land for our remaining mills and we need to speak to property consultants to know how soon we can put them on sale. But we are very clear that we will not compromise on the market price and will not lower rates," said K. Ramachandran Pillai, chairman and managing director, NTC, for which the sale of mill land is a large source of revenue.

After a hiatus of at least a year, MMRDA, which has put up plots for sale at a premium in the Bandra Kurla Complex (BKC) business district in suburban Mumbai, now plans to auction land earmarked for residential homes. In the last such auction by MMRDA (in September 2008, the early days of the downturn), a BKC site fetched Rs1.55 lakh a metre, half that of an auction in March. “We have about 20 hectares that can be sold. We are finalizing the tender because the market is picking up pace again," said an MMRDA spokesperson.