Piramal Sunteck seeks staggered payment option for Mumbai plots

Starlight Systems, a unit of Piramal Sunteck Realty, has sought a four-year staggered payment option to pay Rs 496 crore for two plots it won in the financial district of Mumbai in the last financial year.

Starlight bagged two residential plots at the Bandra Kurla Complex (BKC) from the Mumbai Metropolitan Region Development Authority (MMRDA) in March.

According to the rules, a winning bidder has to make payments for the plots after the date of allotment, which will be decided by MMRDA. The company received its allotment letter from MMRDA in mid-September, after a delay of almost six months.

"Today property prices have come down and the money market is tight. We have asked for a staggered payment schedule from MMRDA and are looking for a positive reply from them,'' said Kamal Khetan, managing director, Piramal Sunteck.

Piramal Sunteck was planning to use the space to expand its high-end residential project —Signature Island — at BKC. "If the government cancels the bid, it will lose a huge amount of money since there are not many bidders for premium plots in today's market,'' said a property consultant, who did not wish to be identified.

Property transactions have halved from the beginning of this year after lending rates went up by 100-125 basis points. Residential property prices have dropped by 10-15 per cent in some pockets of Mumbai.

Mumbai's office property market has witnessed an impact of the global financial slowdown, with deals for office space declining by over 30 per cent in the last three months. Leading property brokers and consultants in Mumbai said prospective tenants are asking for a 50 per cent cut in rates.

At BKC, the city's second main commercial hub, where rentals peaked at Rs 450 per sq ft a month, clients are now negotiating with developers at below Rs 300 per sq ft. Rentals are expected to come down to Rs 200 a sq feet when three prominent buildings are completed in six months.

The slowdown came to the fore early this year itself, when MMRDA failed to get bids for two of the five plots that it auctioned at the BKC. Last week, no bidders turned up for the sale of two Wadala plots by MMRDA. In August, an Ahmedabad-based company was the sole bidder for a plot at BKC. Recently, Railway Land Development Authority (RLDA) also reduced the price of its Bandra land by Rs 668 crore to Rs 3,960 crore and more than doubled the payment period to five years to get a better response from the bidders for its 45,371-sq ft plot.