Cidco Auctions Five Plots In Navi Mumbai At Highest Rates

Maharashtra's town planning and development agency auctioned plots in Navi Mumbai at the highest rates even as the nation's real estate market is grappling with a liquidity crunch.

The City and Industrial Development Corporation auctioned five plots worth Rs 229 crore in Airoli and Vashi area of Navi Mumbai. The rates were four times higher than the base rate.

Cidco auctioned three plots in Airoli measuring 1,560 square meter, 1,796.91 sq mt and 1,969.68 sq mt for Rs 41.77 crore, Rs 45.26 crore and Rs 25.54 crore, respectively, according to e-auction results declared by the city development corporation. In Vashi, plots measuring 3,850.63 sq mt and 3846.32 sq mt were auctioned for Rs 64.24 crore and Rs 52.30 crore, respectively. The e-auction was held on Thursday.

These plots will be leased out by Cidco for 60 years. Shreenathji Organisers Pvt. Ltd., Pacific Properties, Avenue Supermarts Ltd. and Narayani Trexim Pvt. Ltd. emerged as the top bidders.

“In the history of Cidco these are the highest rates that we have got for our plots. Despite the ongoing real estate downturn, we were able to lease these plots at such good rates,” Priya Ratambe, public relations officer at Cidco, told BloombergQuint. “This has been made possible because of all the rapid infrastructure developments like metros and the upcoming Navi Mumbai International airport, which will tremendously improve the region's connectivity.”

Raajesh Prajapati, a committee member of Credai-MCHI, said the deal signified that Navi Mumbai market is getting a good traction.

“All five plots got multiple bidders. This is a very good sign. Some of these plots are centrally located and have very good development and sales potential. RERA is in force for the last two-and-a-half years, hence most fly-by-night operators have been eliminated,” Prajapati, who's also a real estate developer, told BloombergQuint. “Developers who have bided for these plots are quite serious and must have calculated the development potential of the plots before quoting the price. The Navi Mumbai market is showing signs of recovery.”

According to Cidco's tender, two plots in Airoli were leased out for both commercial and residential use, while one plot was leased only for residential purpose. In Vashi, both plots were leased only for commercial purposes. The floor space index—ratio of saleable area to plot size—at Airoli was 1 and 1.5 at Vashi.

But Manohar Shroff, vice-president of Credai-MCHI (Navi Mumbai unit), said such high land rates would set a wrong precedent. “With such exorbitant rates developers won't be able to make these projects viable,” Shroff said. “Already the market is struggling with no takers. A lot of inventory is expected to come in the Navi Mumbai market and nearly 19,000 buildings are coming up for redevelopment here. In this situation builders should have controlled the land price.”

Agreed Pankaj Kapoor, managing director at Liases Foras—a real estate data analytics company. The deal, according to him, is contrary to the prevailing market conditions.

“The rates at which these plots have gone will make the commercial exploitation of the projects unviable for the builders. Only luxury projects can come up in residential sector, but the plot size is also not too big,” Kapoor said. “Even for commercial projects the rates seem quite high. This deal can be considered a one-off and cannot be a benchmark.”