Bharat mill fetches record '1,505 cr

MUMBAI: Indiabulls Real Estate picked up its fourth National Textiles Corporation (NTC) property in Mumbai after it won the bid for the over-eight-acre Bharat Textiles Mills land near Worli Naka for Rs 1,505 crore on Friday. At twice the reserve price (Rs 750 crore) fixed by NTC, the deal works out to about Rs 188 crore per acre.
Interestingly, just a day earlier, a source in Indiabulls had told TOI that the company would not bid "aggressively" for this property because of its poor frontage.On Friday, it seemed to have changed its mind and went the whole hog for this prime land—sources believe this was in anticipation of getting a parking FSI of 4 from the state government. Incidentally, this is the highest price that a defunct mill property in Mumbai has fetched to date.
The company, which is into real estate, power and financial services, last week won another NTC mill—the 2.3-acre Poddar Mills at Worli Naka—for Rs 474 crore as against its minimum price of Rs 250 crore.
Indiabulls has been creating ripples in Mumbai's property market since itentered the real estate business five years ago when it bought NTC's Jupiter Mills for Rs 276 crore and Elphinstone Mills for Rs 441 crore.
The e-auction for Bharat Mills, which commenced on Wednesday, saw a neck-to-neck bidding between Indiabulls and the Lodha Group during the final hours. Lodha stopped bidding at Rs 1,503 crore while the third highest bidder, Peninsula Land (Piramal), did not stretch itself beyond Rs 1,409 crore.
"In the last one hour, the bids shot up by over Rs 150 crore, from Rs 1,350 crore to Rs 1,505 crore," NTC chairman K Ramachandran Pillai told this newspaper on Friday night.
"We are glad to have emerged as the successful bidder in the very closely contested auction of Bharat Mills. All large real estate players were participating till the last bid. Both Bharat and Poddar Mills will enable us to continue on our journey of delivering the best and classiest products in Mumbai," said Vipul Bansal, CEO, Indiabulls Real Estate.
Sources said Indiabulls quoted this high price because it was "confident" that the state government would allow it to utilise parking FSI on this land. According to the government policy, if a developer sets up a multi-storey public parking tower on a portion of its land and hands it over free of cost to the BMC, it is entitled to get FSI as high as 4 in the free sale component.
"Indiabulls will be able to get a development potential of 20 lakh sq ft if parking FSI is approved. The question is, does this locality need public parking at a time when the government has already sanctioned over 25,000 parking slots in the Worli-Parel-Sewri belt?" the sources observed.
According to real estate experts, with parking FSI Indiabulls may have paid just around Rs 13,000 a sq ft for the land, taking into account the future construction cost. "Most likely, it will be a residential project which will sell for over Rs 25,000 a sq ft," they said.
Knight Frank (India) chairman Pranay Vakil said, "The project won't be viable without parking FSI. But, with it, a prospective buyer can still hope to get a flat here for around Rs 25,000 a sq ft. This means a 3 BHK will cost Rs 5 crore. This is still expensive, but that appears to be the market today."
This was the seventh NTC mill to be sold in Mumbai, fetching the corporation Rs 4,000 crore. In fact, its eight property, Finlay Mills, has been mired in legal wrangles after NTC rejected Lodha's of Rs 710 crore last year. Lodha went to court, which directed NTC to reconsider the developer's offer.