Iconic CST project may fetch winning bidder Rs 10K cr in home sales

The winning bidder of the iconic Chhatrapati Shivaji Maharaj Terminus (CSTM) redevelopment project in Mumbai could generate sales of Rs 8,000 crore to Rs 11,000 crore if it goes for residential development as part of the project, said experts in Mumbai property circles.  

Property prices hover around Rs 30,000-Rs 40,000 per square feet in the CSTM area, which is near the central business district of Nariman Point in South Mumbai.

“I doubt if anyone would like to develop an office project given the status of the office property market. Residential is more profitable and will help developers generate funds during the construction itself,” said Pranay Vakil, former chairman of Knight Frank India.

The winner gets to develop up to 2.5 lakh square metres (2.73 million square feet) of prime property in the area as part of the project. Of this, 1.4 lakh square metres will be at CSMT, 80,000 square metres at Byculla and another 30,000 square metres at Wadi Bunder.

Residential sales have boomed in Mumbai in the December and March quarters of FY21 as the state government cut stamp duty on property transactions. Developers can earn around Rs 800 crore a year in rent if they go for a combination of retail and office projects, experts said.

"The developers can earn a rent of Rs 250 per square feet per month if they go for a mix of retail and office development. Revenue streams are different in different asset classes and come at different times,” said Ashutosh Limaye, senior director and head, strategic advisory and valuations at Anarock Property Consultants.

Limaye said for a pure play office, there will be lesser demand as most offices have shifted to Bandra-Kurla Com­plex in Mumbai. The developers have one more attraction to go for residential, given that the project has long-term lease rights of up to 99 years for residential or mix use. Also, it has 60 years for non-residential formats, according to the Indian Railway Stations Develop­ment Corporation (IRSDC).

“Revenue plans are getting ready. We will leave it to the winning bidders on what they want to develop,” said IRSDC managing director and chief executive SK Lohia. 

IRSDC has said it has shortlisted nine bidders, including Godrej Properties, Oberoi Realty, Adani Railways Transport and GMR Enterprises for the final round for the redevelopment, after clearing the RFQ (request for qualification) applications. The winner of the RFP (request for proposal) will get to redevelop the station.

Four investor applications have also been cleared.

The project involves redevelopment and management of the station and developing the adjoining land on DBFOT (design, build, finance, operate and transfer) basis at a cost of Rs 1,642 crore.

The project is a plan of the central government to convert railway station areas into a ‘Railopolis’ or a ‘mini-smart city’ with mixed use development where one can live, work, play and ride. According to the plan, railway stations will be on licence with a concessionaire for 60 years. 

“In most cities including Mumbai, railway stations are in the heart of the city where land is not available. That’s why it makes it attractive,” Limaye said.