In an indication of slowdown in the realty market, National Textile Corporation (NTC) received a lukewarm response to the auction of Floor Space Index (FSI), which took place over the last three days.
Of the total 2 lakh square feet it had put on block, realty major Indiabulls bid for just 1.25 lakh. Even the price quoted in the auction was Rs11,200 per square feet compared to the reserve price of Rs11,000.
The NTC then asked the other two bidders — Microteck Constructions Private Limited (Lodha Group) and New Jet Printing Press to purchase the balance at the reserve price of Rs11,000 per square feet.
Talking to Hindustan Times, Pranay Vakil, Chairman, Knight Frank India Limited attributed the response to high pricing as well as the current market scenario. “Developers will not pay a premium as they see no such returns in the coming years,” said Vakil. He said properties in the mill land area are being sold in the range of Rs20,000- 25,000 per square feet and hence the reserve price quoted was exorbitant.
The recent steps taken by the government to stop reckless use of FSI especially in the island city too discouraged the developers from buying FSI at a higher price as they may not be able to use the same at places where they could get premium prices for the property.
The NTC got 4.95 lakh sq ft worth of FSI from the civic body of which 2 lakh was released for auction in the first phase. This FSI was generated when the NTC after its sale of its mills handed over a part of its premises to the civic body for developing Recreation Ground.
The NTC official, who refused to be quoted, said though NTC was disappointed, it was a good bargain. “Seeing the current market situation as sales have dropped considerably and inconsistent government policies, we got a good price,” said the official.
After 2005, the recent e-actions of two mills—Bharat Textile Mills and Podar Processing were a bonanza for the NTC. It got Rs 1979 crore which was almost double compared to the reserve price of Rs1000 crore.