Land prices weaken in Navi Mumbai; CIDCO invites bids for hotels

The City Industrial and Development Corporation of Maharashtra (CIDCO) has reduced the reserve price for land parcels that it proposes to auction in prime areas close to the Navi Mumbai International airport by as much as 7.4%, compared with land parcels that it auctioned off in May this year in New Panvel. Despite the vicinity of the airport being a prime area for real estate, the reserve prices for one of the three plots is 7.4% lower. The reserve price for the second plot is marginally lower by half a percent while the exact location and reserve price for the third price has not been fixed as yet. The three plots are set to come up for auction at the end of November. Read On ..

In May this year, CIDCO had sold six plots in New Panvel at prices that were as much as 40% lower than the prices in November 2016. Compared with a price of around Rs 1.15-1.25 lakh per square metre in November, prior to demonetisation, bids in May ranged between Rs 65,250 and Rs 96,000 per sq m. The reserve price for all the six plots were set at Rs 43,000 while the reserve prices of the two plots for the upcoming auctions have been set at Rs 42,772 per sq m and Rs 39,822 per sq m each, respectively.

The three land parcels are currently being marketed to hotel majors. CIDCO had invited bids from hotels over a month ago but there were no bidders at that time. Sources said this was because of the rule introduced by the government in December 2016, prohibiting hotels located within 500 m of a national highway, from serving liquor. The goods and services tax (GST) and the Real Estate Regulation and Development Act (RERA) also came into effect in quick succession, and both developers and hoteliers were cautious and adopted a wait-and-watch mode.

Since then, the Supreme Court has clarified that the ban on liquor is not applicable along stretches that fall inside the city or town areas governed by municipal bodies, paving the way for hotels and restaurants in these areas to conduct business as before.

Developers like K Raheja, hotel groups such as ITC, Oberoi, Taj and Hotel Ambassador, located just off Mumbai's Marine Drive, had shown interest in the plots the first time round, but had refrained from bidding, citing the above concerns. CIDCO is now hopeful it will see more interest in the upcoming auctions from global majors such as the Hyatt and Hilton brands as well. The K Raheja Group has completed hospitality projects of the Marriott Group such as the Renaissance hotel in Powai, the JW Marriott Juhu, JW Marriott Sahar, Marriott Whitefield Bengaluru, The Westin, Hyderabad, Four Points by Sheraton Vashi and executive serviced apartments, also from Marriott.

After the auction for these plots, CIDCO has decided not to auction any more land parcels in prime locations for the next six-eight months, in view of a weakening trend in land prices over the last year.

Bhushan Gagrani, MD, CIDCO, told Tradebriefs that while the situation was not bad, he is not optimistic of receiving good value for land, even in prime areas such as Navi Mumbai's Palm Beach Road, as well as developed nodes such as Nerul and Sanpada. He added, "We will put up land parcels where we may have had instances of encroachments, or other problems in the past. However, in the immediate future, we will go slow on land auctions."

- TradeBriefs Bureau - 

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