The Lodhi group of real estate developers today emerged the highest bidder to acquire a 22.5-acre plot in Wadala, central Mumbai, for Rs 4,053 crore.
In an auction conducted by Mumbai Metropolitan Region Development Authority (MMRDA), Lodha quoted Rs 81,818 per sq mt, or Rs 7,604 a square foot, for the plot at the Wadala Truck Terminal, a few metres away from the construction site for a monorail that would link Chembur in the central suburbs with Jacob Circle in central Mumbai.
The plot was earlier earmarked for the construction of a 102-storied commercial complex, which would have been the tallest structure in the country. MMRDA was forced to abandon its plan due to poor response from developers.
But, it is not repenting at all, as Lodha’s bid makes it the largest-ever land deal in the country. Only BPTP, a north India-based real estate player, had fared better in an auction. In 2008, it had offered to fork out Rs 5,006 crore for a plot in Noida, Uttar Pradesh, but later surrendered 75 per cent of the land to the authorities.
Another large-ticket land deal has been in the works, with the Railway Land Development Authority planning to auction a plot in Bandra for which a reserve price of Rs 4,000 crore had been fixed. Due to tepid interest from developers, the agency has had to abort its attempt to sell the plot on at least three occasions in the past.
Today’s deal could change sentiments and MMRDA is looking to cash in on the positive mood. The agency is reviving plans to sell plots in the Bandra-Kurla Complex after it failed to get requisite response to an auction conducted in January.
“Developers are willing to pay high value for land given the short supply in Mumbai. In addition, property prices have shot up by 40-60 per cent in the last six months which is making them bolder,” said CB Richard Ellis Chairman and Managing Director Anshuman Magazine.
While the problems in Europe could affect the participation of international funds in the Indian markets, local funds have cash with them to take care of the funding requirements, real estate consultants said.
Given the staggered payment, Lodha will shell out Rs 5,700 crore over the next five-years for the Wadala plot. The developer has to pay the money in the five years with initial 10 per cent of the bid value due in the next three months. It said it will depend on internal accruals and cash flows from other projects to pay the bid amount.
Lodha’s bid is more than double the reserve price of Rs 40,000 per sq mt and nearly 86 per cent higher than the second highest bid from Suntech Reality at Rs 70,002 per sq mt. Indiabulls came third with a bid of Rs 67,222 a sq mt and Dosti group was the fourth highest with Rs 45,494. Though 14 firms bought bid documents, only four submitted bids, which were opened today.
According to MMRDA, the project would have a Floor Space Index of 20, allowing a total saleable area of 7.5 million sq ft. Mumbai city enjoys a FSI of 1.33. But against this, Lodha will be able to build 20 square feet on every square foot of land bought by it.
The developer said it plans to build a residential complex and to sell apartments in the price range of Rs 13,000-Rs 14,000 per sq ft. The project is expected to get completed over the next five to seven years. At present, residential buildings around the Wadala Truck Terminal command a price of Rs 9,000 to Rs 10,000 a sq ft.