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Rs 2,238 crore land deal in Mumbai’s BKC doesn't indicate revival of real estate market, says Anarock

Updated : June 25, 2019 02:33 PM IST

There are news reports of a record bid for a three-acre land in Mumbai’s Bandra-Kurla Complex. Reports indicate that the Japanese company Sumitomo has submitted a bid worth Rs 2,238 crore for a three-acre plot in BKC. The deal, if it goes through will be one of the biggest in the region.

Anuj Puri, chairman of Anarock spoke to CNBC-TV18 about the deal and the latest happenings in the real estate market.

Puri said the bid value for the BKC land is interesting. “As far as commercial real estate is concerned, it is doing fantastically well,” he added.

Speaking about the BKC deal, he said: “When you start to peel the onion and see why Sumitomo may have bid, one is that Blackstone recently closed a transaction of Rs 2,400 crore where they bought One BKC as a building and this is as recent as ten days ago. So there is a lot of interest in that micro market."

“The rentals continue to go up by 1-3 percent every quarter,” he added.

Talking further about the deal, Puri said: “The last plot that had been auctioned by MMRDA [Mumbai Metropolitan Region Development Authority] was pre-Lehman time, which was 2007. We are now in 2019 and in the last 12 years there has been no new plot that has been auctioned by the Mumbai Metropolitan Region Development Authority.

“Sumitomo would have looked at it that the commercial market is doing very well. Blackstone has, in the last 10 days bought of a fairly significant value as a ticket price. Real Estate Investment Trust (REITs) are doing well, rentals are continuing to go up, in the last 12 years no new supply has hit the market, most of the buildings in the BKC area are running at 100 percent occupancy. So that is what would have gone in the mindset,” he said.

“I cannot say that this is a start of a revival of the real estate market because the commercial market anyway is doing exceptionally well. It is the residential market which is in a problem,” Puri added.

On the residential market front, Puri said, “Residential is doing exceptionally poorly at this moment of time. There is a huge amount of liquidity issue in the current scenario soon after the IL&FS [Infrastructure Leasing & Financial Services] debacle. There has been very little liquidity being given by NBFCs [non-banking financial companies] to the developers. The banks anyway were reluctant to fund the developers.”
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