Posts Tagged ‘Bandra Kurla Complex’

Mumbai Real Estate: Banks absorb most commercial spaces

July 24, 2010

Mumbai’s commercial real estate market has witnessed an absorption of 1 million sq ft over the second quarter of the year from April to June 2010, a majority of which space has been lapped up by the banking, financial services and insurance (BFSI) industry.

According to a report by Jones Lang LaSalle Meghraj (JLLM), the total number of office market transactions in Mumbai has increased over the last two quarters with a noticeable increase in both inquiries and leasing of office space. Much of this space has been taken up by banks and other financial institutions. For instance, DBS Bank leased a 14,000 sq ft of space in Fort House in South Mumbai while Morgan Stanley leased 1.40 lakh sq ft of office space at One India Bulls Center at Lower Parel.

Much of the outright sale transactions in the last quarter also involved the financial sector with Edelweiss and J&K Bank each acquiring one building in Bandra Kurla Complex (BKC) with a total built-in area of 1.80 lakh sq ft and 65,000 sq ft respectively.

Abhishek Kiran Gupta, head of Research and Real Estate Intelligence Services , JLLM, said with the state government’s recent decision to allow letting out of IT parks to financial institutions, an entire new supply is expected to open up for the BFSI. He said the Parel belt especially was expected to witness a huge supply, resulting in a downward pressure on commercial rentals here. The rents in Nariman Point and BKC were not expected to go down any further due to the limited supply.

Two new commercial buildings became operational in the last quarter — Phase II of One Indiabulls Centre in Lower Parel and Kohinoor City in Kurla, both together accounting for 1.4 million sq ft of office space. As of today, Mumbai’s 25.9- million sq ft prime commercial stock has a vacancy level of 8.7%. It said transactions were expected to increase in the coming quarters.

Mumbai Real Estate: Jet Airways to jointly develop BKC property with Godrej

July 5, 2010

Godrej Properties will pay upfront cash to Jet Airways and absorb a certain portion of the debt that Jet Airways will raise to pay for the land

Mumbai: In a move that could give it some breathing space, cash-strapped Jet Airways (India) Ltd is working on a three-way deal with the Godrej group’s real estate arm, Godrej Properties Ltd (GPL), to develop a 1.47-acre plot in Bandra Kurla Complex (BKC), a business district in suburban Mumbai, according to an investment banker and a real estate consultant. Both are advising the companies on the deal.

GPL will pay upfront cash to Jet Airways and absorb a certain portion of the debt that Jet Airways will raise to pay for the land. Both companies will also share revenues once the real estate is developed.

Two senior Jet Airways executives also confirmed the talks with GPL without divulging details. The GPL spokesman declined to comment for this story. The Jet Airways’ spokeswoman said the company “is still in discussion with parties as regards the BKC property”.

“Godrej Properties will invest Rs700 crore to buy additional floor space index (FSI) to build 1.4 million sq. ft of saleable space,” said the investment banker. FSI is the ratio of the total floor area of buildings on a certain location to the size of the land of that location.

Jet Airways, India’s largest carrier by passenger traffic, had bid Rs826 crore for rights to develop the space in an auction by the Mumbai Metropolitan Region Development Authority (MMRDA), the apex body for planning and coordination of development activities in Mumbai, in 2008.

Till date, Jet Airways has only given Rs10 crore to MMRDA and it faces the risk of losing the earnest money—a deposit made to show a serious intent in a transaction—as it could not pay more.

“Godrej will give upfront cash to Jet Airways since it has made some work on the plot. It will also take TDR (transfer of development rights) from MMRDA. One of the Godrej group companies will take over the liabilities of Jet Airways towards this land deal,” the banker said.

According to him, Godrej will also approach the Airports Authority of India to increase the height of the proposed property so that it can have more saleable area. BKC is in close proximity to the Mumbai airport.

Jet Airways will also purchase 250,000 sq. ft space for shifting its headquarters to BKC, but it will not pay anything for this as the cost will be adjusted against the company’s share in the revenue from the property.

The airline is currently headquartered at SM Centre in Andheri, a Mumbai suburb. This property is on lease.

One senior Jet Airways executive, requesting anonymity, said his airline is yet to sign the agreement, though both the parties have more or less agreed to the current three-way structure.

According to experts, this deal will bring relief to Jet Airways as it will bring some cash immediately to the airline that has Rs13,759.50 crore debt on its books as of 31 March. Also, the airline will save at least Rs10 crore rent a year by shifting to the new office space, experts say.

Hit by the global economic slowdown beginning late 2008, Jet Airways was unable to develop the BKC plot.

“It is a win-win situation for both Jet Airways and Godrej Properties. By giving away the developing rights to Godrej Properties, Jet Airways would not require to go for raising debt to buy the plot and invest management in real estate development. Besides, the airline would also get a state-of-art headquarters in BKC,” said Sanjay Dutt, Chief Executive Officer (Business) of real estate services firm Jones Lang LaSalle Meghraj.

The deal will also be an opportunity for GPL, which does not have a presence in Mumbai’s front-office segment, to demonstrate its presence and capabilities of building an A-grade office space in the new financial hub, he added.

Is Kurla slated for a makeover?

June 3, 2010

What Inorbit Malad did to Malad and High Street Phoenix did to Lower Parel , could very well be what Phoenix Market City will do for Kurla. With approximately 1.3 million sq ft of retail and approximately 1.2 million sq ft of commercial space, including almost 80,000 sq ft of a family entertainment centre and a Marriott Hotel, Phoenix Market City, Kurla, is designed to be a high footfall destination . 

Explaining their choice of suburb for this project, Shishir Shrivastava , executive director, The Phoenix Mills Limited, says that “The hitherto low-profile eastern suburb of Mumbai , starting from Kurla to Thane on the Lal Bahadur Shastri Marg, is fast becoming the next commercial hub of the city, with tony office complexes and new-age retail destinations. Additionally, it is developing as the centre of the city, since it is equidistant from both the western suburbs and Navi Mumbai.” Monesh Bhojwani , AVP, Retail Services, Jones Lang LaSalle Meghraj seconds this. 

“Kurla has changed over the last few years because of the rise in commercial developments in Bandra Kurla Complex, coupled with the new residential apartments coming up, e.g., Insignia, Signature Island, etc., ” he says. 

One of the strongest factors in favour of Kurla, is its location and connectivity. The east-west connectivity in the suburbs has largely improved due to routes like the Santacruz Chembur Link Road, the JVLR, which make it convenient for customers to travel from the Bandra-Santacruz belt, to Kurla. 

“Similarly, the Bandra Worli Sea Link will make this project accessible to south Mumbai customers,” says Bhojwani. Elaborating on the role connectivity plays in the success of any project, Sandeep Shah, managing director, HBS Realtors , who are partnering with Phoenix Mills Ltd for this project, states that “One of the main reasons for the success of High Street Phoenix, has been its prime location, being situated on a main arterial road – Senapati Bapat Marg. Phoenix Market City-Kurla too, is located on LBS Marg, another prime arterial road in suburban Mumbai. This makes Kurla a hotspot for recreation and offices,” says Shah. The typical catchment area is expected to be Bandra, Santacruz, Vile Parle, Chembur, Sion, Matunga, Kalina, BKC, Vidyavihar, Wadala, Ghatkopar and the other traditional known central hubs. 

Another attraction at this project is the 300-key Marriott Hotel, slated to be the first international five-star hotel brand to start operations in the central suburbs. Shrivastava explains the rationale behind this move. “A mixed use development such as this can unlock the true value of real estate and bring a unique customer experience . 

Also, upscale internationally recognised hotels at such city centre locations upgrade the surrounding locality ,” he adds. 

So, will all this translate into higher real estate prices in Kurla? Bhojwani explains that “Developments like these have had a positive impact on the real estate prices in the suburbs, wherever they have opened up. Phoenix Market City, will be able to repeat the success of Phoenix Mills. The market sentiment too is upbeat compared to a year ago and retailers are quite positive about the development . Thus, timing-wise it is very suitable,” he concludes. 

RBS, DBS in talks to rent space in Lever House

March 28, 2010

“Very few office buildings in Nariman Point have 150,000 sq ft space now. That is the reason why there is so much interest,” the consultant said. HUL is said to have refurbished the elevators, air conditioning, lobbies, etc to get better rents in the old office.

“Since banks are consolidating their offices, BKC (the Bandra-Kurla Complex in central Mumbai) and Nariman Point (Backbay) are the only two options now. Since BKC is yet to have proper social infrastructure, Nariman Point is the first preference,”’ says Raja Seetharaman, national head, agency leasing, JLLM.

After years of playing second fiddle to newer areas such as BKC and Andheri in Mumbai, Nariman Point is bouncing back. According to estimates by property consultant Jones Lang LaSalle Meghraj, at least seven lease deals for 45,000 sq ft (BKC saw deals for 50,000 sq ft in the same period) have been made in buildings such as Hoechst House, Express Towers and One Forbes House in the past six months. That’s 50 per cent more than the previous six months. Like HUL House, most of the A-Grade buildings in the area had been refurbished to attract higher leasing.

Rlys invites developers to bid for prime Bandra land

March 22, 2010

Anuj Puri, chairman of realty consultants Jones Lang LaSalle Meghraj (JLLM), said he expected considerable interest among developers for the RLDA meet. But since the land’s title is not clear, developers will discount the price and the possible construction potential, he said. Puri is quick to add that the interactive meet will give railways a fair idea on the base price it can expect once the ownership fight is resolved. If the base price is kept too high, as seen in recent auctions in Bandra-Kurla Complex (BKC), the whole process will be a damp squib, he said.

Three in race for developing Bandra prime property

March 19, 2010

Anuj Puri, country head of the property broking firm Jones Lang LaSalle Meghraj, said: “Though there is demand in that part of the city, if such a huge supply comes up at one go, it could have some downward impact on prices. However, it is still too early to say anything, as the project would take time to come up.”

India Inc heads for BKC again

December 3, 2009

The current wave will see pharmaceuticals and telecom firms shifting to a landscape so far dominated by financial companies, said Anuj Puri, chairman and country head of international property consultant Jones Lang LaSalle Meghraj. “Due to the increased demand for office space, over 1 million sq ft of office space is expected to be added in BKC next year. The number is likely to go up to 8 million sq ft in next five years from the existing 4 million sq ft,” Mr Puri added. Unlike the early occupants of the business district, which developed their own buildings after buying land from the state, the latest entrants are purchasing developed office space from builders.


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