This story is from September 19, 2006

India Inc rides realty boom

Tinesh Bhasin / TNN / Sep 19, 2006, 23:22 IST

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Lured by high property prices and low rentals, firms are selling their high-end homes.

MUMBAI: Corporates are riding on real estate boom. Lured by high property prices and low rentals, firms are selling their high-end homes that once housed their senior managers. Most of these apartments are located in sought after localities of south Mumbai.
Some properties recently auctioned include an American Express-owned 1,206 sq ft 3BHK house in Twin Towers at Prabhadevi, Hindustan Lever's 1,537 sq ft flat at Nepean Sea Road in Jai Darshan building and HSBC's 1,861 sq ft apartment in Umang at Grant Road.
Another property, a 5BHK duplex which is more than 4,000 sq ft area, owned by American Express, was sold for Rs 25 crore (around Rs 55,500 per sq ft).
Money received from these sales are used for business expansion and relocation. The trend of owning high-value assets has given way to rental accommodations.

"Renting a property is a hassle-free job as it is the owner's responsibility to provide services and maintenance for the house," says Pranay Vakil, chairman, Knight Frank India.
Companies also save extra as most of them have managers maintaining houses and managing property portfolios. Staff cost is reduced as they capitalise on real estate.
The property portfolio of HLL and Standard Charted has more than 30 such residence each, where as more than 20 high-end residential properties are owned by American Express and HSBC each, according to market sources.
Such portfolios cost companies dearly as they are paying big money under the fringe benefit tax (FBT). Paying FBT on rent works out cheaper.
Owning properties do help firms to show depreciation in their account books, but again depreciation is marginal and needs to be updated with increasing property prices.

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