Mumbai: During the financial year 2023-24, the Mumbai Metropolitan Region Development Authority (MMRDA) plans to lease out 13,230 square metres of land at Bandra Kurla Complex to monetise and fund infrastructure projects. However, with the economic crisis unfolding in the West and China, the question that has arisen is if the development authority would be able to unlock maximum potential from the two plots.
In America, earlier this year, three financial institutions – Silicon Valley Bank, Signature Bank and Silver Gate Capital have faced financial turmoil. Some analysts claim that these are the early signs of an economic recession kicking in in 2023 and the crisis slowdown will only impact more economies around the globe, hereon.
China's real estate crisis
Now, the real estate crisis has started to unfold in China with one of the largest private players in the sector – Country Garden reporting a record loss.
As per MMRDA’s 2023-24 budget approved on March 10, by Chief Minister Eknath Shinde, the plots of C-13 and C-19 at Bandra Kurla Complex’s G Block will be sold for commercial use. These two land parcels are near Mumbai Cricket Association’s Ground and Clubhouse.
Plot C-13 is spread over 7,131.15 sq mts and plot C-19 is smaller at 6,098.85 sq mts. Back in May, MMRDA had invited quotations from global corporations and since then, it has been repeatedly extending the bid submission date. As per the latest deadline extension, September 29 is the submission date and the bids will be opened on October 3.
In October 2022, for the two plots put up on the block, the MMRDA fetched almost the same price as the reserve price. The development authority had kept a reserve price of Rs 3,44,448 per sq. mtr for which there was only one company that came forward – Goisu Realty of Sumitomo Corporation, who bid only Rs 2 per sq. mtr. The two plots C-44 and C-48 are 5,807.50 sq. mtrs and 6,077.60 sq. mtr big.
It took MMRDA four years and repetitive invitations to draw this one private company that too after having altered its reservation from commercial to mixed use.
Challenges for MMRDA
With such a response in the past, will MMRDA get a desirable response and fetch the kind of revenue it estimates to fund infrastructure projects in the Mumbai Metropolitan Region (MMR) has become the moot point.
Prior to the Lehman Brothers crisis of 2008 hit, there used to be intense competition among companies who would bid unimaginable prices to have their India’s head office at the business district of Bandra Kurla Complex.
“It will be difficult for the MMRDA to find anyone in the current market conditions. You have a tough market as well, the global economy is also not doing well. If they come up with a high price, then it is unlikely that there will be any takers,” said Pankaj Kapoor, Founder & Managing Director, Liases Foras, real estate research and rating agency.
Another industry observer voiced similar sentiments of them not anticipating any rush of bidders showing interest in Bandra Kurla Complex plots sold by the MMRDA.
Overall, the real estate sector experts aren’t very positive given the larger negative outlook the global economy is headed towards.
Land to be leased out: 13,230 sq mt
Time: Financial year 2023-24
C-13 and C-19 plots to be sold for commercial use
Plot C-13 area: 7,131.15 sq mts
Plot C-19 area: 6,098.85 sq mts