Mumbai Mill Auction May Push Up Real Estate

The state-run National Textile Corporation (NTC) has decided to put four more mills in central Mumbai up for auction, a move that could push real estate prices through the roof.

The NTC’s proposed auction of four mills in Worli and Parel could raise real estate prices in central Mumbai because developers are expected to bid “higher than-market” rate for the around 40 acres of prime land, freeing it for private developers in this “land-starved” metropolis.

The state-run textile company has already raised around Rs.20 billion from its first phase of sales from the auction of five mills after the Supreme Court lifted the legal obstacle on the sale of Mumbai mill land in March 2005.

It now plans to bring under the hammer the 18-acre Madhusudan Mills, in Worli - the largest in Mumbai. The other mills are Poddar Processors and Bharat Textile Mill, also in Worli, and Finlay Mill in Parel.

The textile company is awaiting the government’s nod to invite bids from private developers.

“Once we get the final nod from the state government, we will invite tenders,” NTC managing director O.P. Agarwal told IANS.

Although Agarwal was not forthcoming on the amount the corporation is expecting, property consultants are more than willing to speculate.

“Prices will be as high as, if not higher than, existing rates, with builders from outside Mumbai coming in for bids this time,” said Gopal Sanyal, a property consultant.

“The three mills in Worli could fetch more than the going rate of Rs.20,000 per sq ft and the ones in Parel more than Rs.12,000 per sq ft.”

Agarwal, however, admitted that prices have soared since the company last sold its mills.

“Prices soared even over the period we sold our mills in the first phase. While we got Rs.7,000 per sq ft for the sale of the 14-acre Mumbai Mills in Lower Parel (sold to Indiabulls), a months later we got Rs.15,000 per sq ft for the sale of the 4.9-acre-Kohinoor Mills in Dadar, both in central Mumbai,” the NTC top official said.

The state-run textile company also plans to cash in on the booming real estate and plans to develop the land on its own.

“Plans are on to develop real estate on our own. We plan to construct a 72-storeyed India International Trade Tower in the 11.96-acre India United Mill No. 6 at Pravhadevi,” Agarwal disclosed.

Kohinoor Mills was sold to Navi Nirman Sena chief Raj Thackeray-Umesh Joshi partnered Kohinoor Constructions, which is building a shopping mall at the site.
Real estate prices in Mumbai, which are among the highest in the world, began to rise in 2004 and got a further boost when NTC auctioned its first set of five mills in 2005.

But environmental watchers are not amused with the boom.

“The area is twice that of the Oval Maidan at Churchgate and thrice that of Cooperage, both among the only few green spaces remaining in the island city,” said Sonia Fernandez of Bombay First, a watchdog body.

“The state government’s policy on the mill land is lopsided. The city’s infrastructure can no longer bear the burden of private development. There needs to be some regulation in this madness,” said Sonia.

“The mills of Mumbai have played a major role in the industrialisation of Maharashtra. But the sale of these mill lands remains a contentious issue because some of the 600 acre of mill land was initially meant for public amenities and low-cost housing.”

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Source: IndiaRealEstateblog