Rs 2,500 crore gets Railways by leasing land in Bandra
A source says that the Indian Railways has introduced tenders and the land parcel given to the successful bidders on a 45-year lease is expected to collect Rs 2,500-3,000 crore. This land is given for commercial development of 4.3 hectares of a prime land parcel in Bandra (east).
The Railway Land Development Authority (RLDA) is committed the task of commercial exploitation of this land which has floor space index (FSI) of 4.
The Maharashtra government had raised the FSI limit of this land from 2 to 4 in 2008. Due to the increase in FSI almost 60 percent of proceeds will be utilized for funding the Rs 5,300-crore Phase II of the Mumbai Urban Transport Project (MUTP) by Mumbai Rail Vikas Corporation (MRVC).
MRVC is public sector organization formed in 1999 and has capacity of augmentation works for the sub-urban railway system in the Greater Mumbai area.
As per the bid document the centrally located land common boundary with Western Express Highway has 16 percent area under coastal regulation zone (CRZ) due to which the FSI on the plot will 3.68.
Mr. Sanjiv Chaudhary, director for valuation and advisory (western region), Colliers International, global real estate consultants, says that this is the common border parcel of land in a prime location and should catch a lot of interest from developers. If executed properly than this commercial development could be good competition to the financial centre of Bandra Kurla Complex (BKC).
As a new development and development risks involved the property may charge a little low capital value and rentals initially as compared to BKC.
He further says that the expected amount will be in range of Rs 20,000 to Rs 25,000 per square feet for this new development.
The capital value of BKC ranges between Rs 26,000 per square feet to Rs 35,000 per square feet for ready properties whereas rentals range in R220- 350 per square feet per month.
This process was first started in 2008. The proposal faces the opposition from some citizens who disputed the ownership of the land. When RLDA invited bids 6 year ago, it was in 2012 that Maharashtra’s revenue department vacated the stay on the given land parcel and guided the Mumbai suburban district collector to carry out measurement and demarcation.
Mr. Rakesh Saksena, managing director, MRVC, says that there were some legal problems that needs to be solved out but the solving of these problems the tenders for the land have been introduced. They believe that the process goes on smoothly as a large amount of earning from development of this land will be utilized for the ongoing MUTP-Phase II.
The bidders will be selected based on the amount quoted for payments to be made to RLDA as a combination of one or more of the following — lease premium, annual lease rent and percentage share from project revenues.
The selected bidder shall submit commitment security of Rs 60 crore within 2 weeks from the issue of letters from RLDA after the opening of the financial bid. The project has to be executed through a special purpose company (SPC) to be set up by the selected bidder.
The SPC created will also needed to open and run an escrow account in which 75 percent of project revenue shall compulsory be set aside towards payment of outstanding installments of lease premium to RLDA.
In condition of lease premium, the selected bidder will be required to deposit 15 percent of the lease premium amount within 2 months from the date of issue of letter of acceptance (LOA) by RLDA. The complete lease premium is to be paid within five years from the date of payment of the first installment.
Grant Thornton is the consultant on the project and the bids will be evaluated by the consultant along with RLDA. The last date for submission of bids is June 3, 2014.
Source: The Financial Express
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