Godrej sells 4.35L sqft at BKC for Rs1,479 cr to pharma major
In one of India’s biggest real estate transactions, Godrej Properties have sold 4.35 lakh sqft of its Bandra-Kurla Complex (BKC) project to pharma major Abbott India for a staggering Rs1,479 croremumbai Updated: Oct 01, 2015 01:20 IST
In one of India’s biggest real estate transactions, Godrej Properties have sold 4.35 lakh sqft of its Bandra-Kurla Complex (BKC) project to pharma major Abbott India for a staggering Rs1,479 crore.
Abbott paid Godrej Rs34,000 a sqft, much higher than the Rs28,000 a sqft commercial spaces in BKC area currently command.
Godrej BKC is a high-end commercial real estate project with around 1.3 million sqft of saleable area. Godrej Properties have partnered with Jet Airways to develop the land parcel, which is expected to be completed by mid-2016.
Pirojsha Godrej, managing director, Godrej Properties, said the transaction is an important driver in the company’s plan to unlock value for commercial spaces. “It is part of our stated strategy to monetise our commercial portfolio and focus on other opportunities such as residential spaces,” he said.
Abbott India said the deal will allow it to consolidate its existing offices and operations in Mumbai to a single location. “India is one of the most important places in the world for Abbott and we are investing here accordingly,” said Miles White, chairman and CEO of Abbott.
Skidmore, Owings and Merrill, an architectural firm that has designed the world’s tallest building, the Burj Khalifa in Dubai, and the Freedom Tower in New York, is the designer, while Larsen & Toubro will construct Godrej BKC.
Godrej Properties will use the money to reduce its total debt of around Rs2,500 crore. The project has another 3 lakh sqft of built-up space for sale.
Abbott has invested Rs25,600 crore in India over the past five years and intends to expand its manufacturing capacity and research and development capability. The shares of Godrej Properties surged 7.5% to Rs329.10 on the BSE on Wednesday. “It is at a premium location – the BKC. In addition, the vacancy levels are reduced, resulting in commercial market picking up. The Godrej brand has also contributed to this pricing,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research firm.
Jet Airways had purchased the land for Rs399 crore from the Mumbai Metropolitan Region Development Authority (MMRDA) at an auction in 2006. Their plan was to shift their headquarters to BKC from Andheri. However, the airline company faced problems and subsequently got into a joint venture company with Godrej Properties to develop the project. Jet has retained 2.5 lakh sqft for its headquarters.
The commercial realty sector has been going through a rough phase in the past few years, with many companies postponing their expansion plans and others looking at cutting costs. This has prompted builders to cut down on commercial space plans and opt for residential units. However, the commercial market is reviving and rents are stabilising.