Developers Resort to Discounts to Sell Commercial Properties

June 9, 2009	(1 votes, average: 4 out of 5)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

Realty companies are resorting to discounts to sell commercial properties in order to improve cash flows and reduce mounting debts. DLF, the country’s biggest real estate firm by market capitalisation, has recently sold its 66% stake in a special purpose vehicle that owns eight acres at Prabhadevi in Mumbai for Rs 310 crore, which analysts feel was at a discount. It is also eyeing to raise around Rs 2,000 crore by selling two commercial properties in the city. Unlisted firm K Raheja Universal recently sold a plot in Santa Cruz in north Mumbai for around Rs 60 crore.

Mumbai is not the only city witnessing distress deals in the commercial property space. Bangalore-based Sobha Developers is learnt to have put a plot in the country’s IT capital on the block with a ticket size of Rs 100 crore. India’s second-largest firm by market cap Unitech, too, is going all out to sell some of its commercial properties to pay down debt. In the past few months, it has sold its Marriott Courtyard Hotel in Gurgaon for Rs 232 crore and an office property in Saket, New Delhi, for Rs 500 crore. The combined debt of DLF, Sobha and Unitech is estimated to be at Rs 25,000 crore. Vimal Shah, managing director, Akruti City, a city based real estate firm, said: “While the residential space has started looking up, commercial properties do not have buyers. Many big builders all over India are cautious with their commercial complexes.”

In the past three months the commercial property rates in New Delhi, Mumbai and Bangalore have witnessed a 30-45% decline in price. Rates could fall further if analysts are to be believed. Anuj Puri, country head, Jones Lang LaSalle Meghraj (JLLM), a property advisory firm, said: “It seems that the commercial property market will take at least a year to revive. Presently only the residential market looks stable and their rates may not fall for some time while commercial property could still see some correction in prices.” “Many big builders have come up with proposals of selling commercial properties in Mumbai and New Delhi,” opined Pravin Doshi, chairman, Acme Group, a Mumbai-based real estate developer.

News Published Under:   Mumbai |

Comments