Real estate development at Mumbai airport takes off with Rs 580-cr deal

GVK group vice president Sanjay Reddy said that Rs 350 crore will be used as project finance for airport modernisation

Real estate development at the airport here has taken off, with Mumbai International Airport Ltd (MIAL) leasing a 5.5-acre plot near the international terminal at Sahar to Oasis Realty for Rs 580 crore. A hotel and office complex will be developed at the plot.

Last year, MIAL had sought bids for land parcels of 10 acres each. Overall, MIAL will lease 200 acres for hotels, offices and convention centres, under the SkyCity project. “We had called for bids for four plots. The bids for two plots have been finalised; we will conclude the deals for the other two by the year-end. We are in discussions with developers and there is a lot of interest,” said Sanjay Reddy, vice-chairman of the GVK group, which is developing the airport.

So far, MIAL’s commercial development was stuck due to delays in securing clearances and shifting utilities. Also, the land was being used for airport works.

Reddy said the deposit amount of Rs 350 crore would be used as project finance for airport modernisation, while Rs 230 crore was the lease rent. The two land parcels awarded on Wednesday have been sub-leased for 23 years, extendable for an additional 30 years.

Overall, about Rs 1,000 crore collected from real estate development will be used as project finance. Initially, MIAL had hoped to raise this amount from real estate deposits by March 2013.

MIAL said at the awarded land parcel, commercial development of 1.16 million sq ft was possible. It added this was part of the overall commercial development of 22 million sq ft, through 10 years.

Sources say the real estate development might fetch MIAL about Rs 18,000 crore. Reddy, however, said, “This is speculative…I will not be able to comment.”

MIAL is operating the airport on a 30-year lease from the Airports Authority of India. The overall investment for modernisation of the airport is estimated at Rs 12,000 crore.

REAL MONEY HERE

• Last year, MIAL had sought bids for land parcels of 10 acres each. Overall, MIAL will lease 200 acres for hotels, offices and convention centres, under the SkyCity project
   
• Sources say the real estate development might fetch MIAL about Rs 18,000 crore