No bids for BKC plot on the block

The 3162.47-sq-metre plot was the first to be put on the block after a gap of two years. It offered a FSI of 4,allowing a built-up area up to 14,500 sq m and commanding a total estimated price of Rs 435 crore.

Among those who had bought documents were big names such as HDIL,Godrej,Bharti Realty and Oberoi,as well as Vinita (Wadhwa Group),Starlight Systems (Ajay Piramal Group),Top Value Estate and Yashraj Developers.

The residential market is limping back to normalcy but the demand for commercial space remains at an all-time low. According to the latest report by CB Richard Ellis,BKC already has a high vacancy rate,19.2 per cent.

Developers say they preferred not to bid for the BKC plot,aggressively priced as it was,at Rs 3 lakh per sq m (approx 30,000 a sq foot) of built-up space.

“Today,commercial realty prices have taken a heavy beating and we are selling existing property at BKC for Rs 22,000-24000 per sq foot. At such times,if the MMRDA pegs the cost of the land itself at Rs 30,000 a sq foot,who would want to take the risk?” said one of the developers who had bought the documents but backed out.

The pricing of built-up areas across BKC has been a flat Rs 3 lakh a sq metre since the FSI was hiked to 4 in May 2008. When the last sale was held in March 2008,that high pricing went only with the initial FSI of 2; for any FSI above that,it was only Rs 97,000 per sq m of built-up space.

Even then,the MMRDA had found no takers for two of its five plots,and it is yet to recover about Rs 1,000 crore from Starlight Systems and Jet Airways that had bid for the other three.

Knight Frank (India) chairman Pranay Vakil said the projected commercial realty supply over the next two years is 163 million sq ft against an estimated demand of only 122 million sq ft; this will lead to a vast oversupply. “Over 75 per cent of the office space in India is taken up by the IT/ITES sector and the slowdown in this segment has sent the office market for a toss,” said Vakil.

Metropolitan commissioner Ratnakar Gaikwad said after Tuesday’s no-show,the MMRDA will release the plots according to new financial models. Consultant firm KPMG recently submitted a report suggesting a list of financial models other than the existing one of leasing out plots for 80 years. “We will invite bids soon,” said Gaikwad.