Sale of Air India building set to be another landmark in Mumbai real estate market

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The iconic building owned by Air India at the prime location of Nariman Point in Mumbai, may be sold for approximately Rs. 600-700 crore as per reports. This is lower than the prices that could have been garnered by this 23 storeyed structure almost 10 years earlier. Nariman Point is one of the most expensive office zones globally but has ceded ground to the Bandra-Kurla Complex (BKC) over the years. Nariman Point mostly has older buildings and companies desirous of setting up modern workspaces look for automation features and bigger floor plates as per reports, which makes them go over to BKC. The previous headquarters of Air India here could thus get the sum mentioned earlier on account of lower redevelopment possibilities.

Several office goers also live at residential complexes near the Bandra-Kurla Complex and hence Nariman Point has lost some of its previous sheen as a key office destination. As per reports, rates currently range between Rs. 28-32, 000 per sq. ft. for property at Nariman Point while they hover between Rs. 32-35, 000 per sq. ft. at the Bandra-Kurla Complex. Prior to the financial crisis almost 10 years, Nariman Point had rates crossing more than Rs. 50, 000 per sq. ft. Rental prices here are around Rs. 180-250 per sq. ft. which is lower than Rs. 450-500 per sq. ft. in the peak period prior to the financial crisis in the year 2008. Rentals in BKC are between Rs. 180-350 per sq. ft. at present.

Discussions have already commenced between the Government and the JNPT (Jawaharlal Nehru Port Trust) for the latter to purchase the iconic structure and raise funds for the embattled national carrier. The building covers around 22, 000 sq. ft. and multiple floors in it are vacant at present as per reports. There are floors in the commercial building which look out onto the pristine Arabian Sea and these are rented out to companies like TCS Limited (Tata Consultancy Services), State Bank of India (SBI) and Directorate General of Shipping among a few others. Express Towers had a similar sale in the year 2014 for a whopping Rs. 870 crore and covers 400, 000 sq. ft. with 10-15% vacancies when the sale took place.

Union Minister for Shipping, Nitin Gadkari, has reportedly confirmed a deal with the JNPT and upon completion of the sale, the building may be offered on rent to several Government offices. If the airline sold the building 10 years ago, it may have mopped up close to Rs. 900-1, 000 crore but a maximum of Rs. 700-800 crore can be garnered today according to reports.