After successfully auctioning off land at Bandra-Kurla Complex (BKC), the state government is now looking to redevelop a government colony spread across 93 acres in adjoining Bandra in a similar fashion.
The move to monetise the land could also bring the government revenue worth thousands of crores. Although officials are not willing to risk a particular figure at this stage, the government will earn anywhere from Rs20,000 crore to Rs40,000 crore, depending on the real estate market condition when the actual auction takes place. It also opens up premium land in the city for residential and commercial development. The colony is in Bandra (East), adjoining the commercial hub of BKC — one of the prime real estate areas in India.
The Public Works Department (PWD) is likely to bring this redevelopment proposal to the state cabinet for approval in the coming month.
The department expects to retain nearly half of the 93 acres after constructing government quarters for 5,000 staffers, besides building a high court precinct as a land bank, which is proposed to be sold.
“Earlier, proposals of developing the colony by handing it out to three developers in exchange of incentive Floor Space Index (FSI) was to fetch the government only Rs1,300 crore. This way, we will earn more than a minimal 10 times the price,” said a senior bureaucrat.
He said the government was also planning to hike FSI for the Bandra colony area to 4, to make the deal more commercially viable for the government.
The chief minister is keen on unlocking the maximum value of this land, instead of handing it over to private developers, as is the established practice.
The MMRDA has been successfully using its land bank in BKC to fund infrastructure projects. But officials admit the total quantum of earnings would depend on market conditions.
“The MMRDA had put up a plot for auction in 2010 for a reserve price of Rs3 lakh per sq metre, but they didn’t get a buyer. Current rates for one sq metre plot could fetch us Rs4 lakh to Rs5 lakh per sq metre. So, how much we can get from this deal depends on market conditions at the time, our reserve price etc,” said another official.
He said the government hoped to earn anywhere in the range of Rs20,000 crore to Rs40,000 crore.
The redevelopment of the Bandra government colony was first cleared in 2009 by former chief minister Ashok Chavan. Redevelopment was to be undertaken by three developers — DB Realty, Ackruti City and Kakade Developers. They were to pay Rs1,300 crore to the government together and construct government buildings in exchange of a land parcel of nearly 20 acres for commercial redevelopment.
However, the project never really took off.
The first hurdle came after DB Realty promoter Shahid Balwa was arrested in the 2G spectrum case. Both DB Realty and Ackruti never paid the upfront amount to the government to seal the deal. Kakade group paid Rs142 crore and this case is now under litigation. Sanjay Kakade, promoter of the Pune-based Kakade Infrastructure is a Rajya Sabha MP supported by the BJP.