Oberoi Realty soars 18% on Mumbai land deal

Oberoi Realty has emerged as the highest bidder for Tata Steel's 25-acre Borivali land parcel in Mumbai. The Mumbai-based developer will pay Rs. 1,155 crore for the land parcel located at the junction of Western Express Highway and Dattapada road in Borivali (E) in Mumbai.. Oberoi Realty, which has to pay the entire amount to Tata Steel within a month, will use internal accruals and receivables to pay the deal amount, Vikas Oberoi, chairman and managing director of Oberoi Realty told NDTV.. Mumbai's number two real estate developer plans to come up with a residential project on the land, Mr Oberoi said. The neighbourhood predominantly comprises medium to high-end residential developments.. "This (land) is in our backyard. We have done a lot of work in this part of the suburb. We have Mulund, which is in the eastern suburb; we have Goregaon on the western express highway, which has already become very premium. This project will complement Goregaon," Mr Oberoi added.. The company says the project will attract those buyers who cannot afford the costlier Goregaon suburb. Prices are likely to start at Rs 15,000 per sq feet (all inclusive), much lower than Goregaon's going rate at Rs 20,000 sq feet, the company said.. Oberoi Realty is likely to sell a total of 4.4-4.5 million sq feet space in the project. The project is likely to be launched in nine months (between January to March 2015), when all the approvals are in place, the company said.. Shares in Oberoi Realty gained as much as 17.6 per cent on Wednesday. The land purchase could be a boost to Oberoi's profit margins, analysts say.. Kotak Institutional Equities estimates Oberoi can start monetising the acquired land from fiscal 2016, calling the deal "value-accretive.". CLSA said the deal addresses long standing questions on deployment of cash. JP Morgan said the deal is net asset value accretive but earnings dilutive in 2015-16. The auction concluded on Tuesday, three months after Tata Steel advertised for the property in December 2013.. Oberoi Realty shares ended 9.7 per cent higher at 217.95, while Tata Steel finished 2 per cent higher at Rs 374. Both stocks outperformed the broader Sensex, which gained 0.2 per cent. (Track stocks). (With inputs from Reuters)

Oberoi Realty soars 18% on Mumbai land deal

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