Mumbai, Nov 13, 2008

Stanchart seals Rs720cr deal at BKC, saves Rs200cr

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MUMBAI: At a time when the economic slowdown has applied the brakes on sale of commercial properties, Parinee Developers recently sold 2.2 lakh sq ft to international bank, Standard Chartered, for a massive Rs720 crore.

The deal is for office space in the under-construction Crescendo building at Bandra Kurla Complex (BKC).

Though it’s one of the biggest deals in recent times, the transaction shows rates have fallen by almost 30% to 40%, property experts say.Outright property sale is rarein BKC.

"Stanchart has, in fact, saved Rs200 crore. If one works out the mathematics, the bank has got land at roughly Rs32,000 a sq ft which is equivalent to a rental of Rs300 a sq ft plus appreciation of 14%," says Aniruddh Wahal of global property consultants Jones Lange Lasalle Meghraj. Wahal has a point. About a year back, British Council bought commercial property at BKC from Naman Developers for around Rs40,000 per sq ft.

However, Anshuman Magazine, managing director of global property consultant CBRE, says it is a one-off deal as demand for property by end-users like Stanchart is limited. Despite being an exception, brokers feel Stanchart paid a very high price especially when the liquidity crunch has corporates scaling down expansion plans.

"There is no slowdown in demand. But where is the money? There are no takers even at the discounted rate. With nearly one million sq ft of land, under various stages of construction at BKC, expected to hit the market in the near future, prices are going to fall even further. Even if one calculates a yield of 13%, it will be years before Stanchart realises the price it paid for the property," said a consultant.

A Stanchart spokesperson said they were planning to set up their corporate headquarters at the new premises which will also have the wholesale and retail banking operations.

The commercial lease market in the suburban business district has also witnessed a slump. In the past few months, the rental price for A-grade properties was nearly Rs400-450 per sq ft. Office rentals have fallen to Rs300-350 a sq ft from the earlier Rs500.

Fortune 2000 building, Windsor Plaza and Platina, all A-grade commercial buildings at BKC, are quoting a rental of over Rs330 a sq ft compared to Rs450 a sq ft six months back but are yet to find any takers.

A property management group has leased 2,000 sq ft space at Trade Centre, a commercial building constructed by Wadhwa Developers at BKC, for approximately Rs325 a sq ft as against the market price of Rs400 a sq ft. Six buildings constructed by Naman Group close to Bharat Diamond bourse are on offer for a lease of Rs325 per sq ft against the Rs375 a sq ft being quoted earlier.