A land auction at BKC—a prime commercial real-estate destination in Mumbai—which opened today did not attract any bidders because of the high prices quoted by MMRDA

The Mumbai Metropolitan Region Development Authority (MMRDA) auction at Bandra-Kurla Complex (BKC), a prime commercial real-estate destination in Mumbai, failed to attract any bidders, as the price quoted by the authority was perceived to be very high. There were about eight perspective bidders—including developers and banks—in the fray.

A few developers like Indiabulls Real Estate, Sunteck Realty Ltd, Peninsula Land Ltd and Godrej Properties Ltd were seriously considering the land deal. But none of them turned up at the auction on Wednesday because MMRDA was quoting Rs3 lakh per square metre for the plot, which has a floor space index (FSI) of 4.5. The total amount quoted for the deal was between Rs450 crore-Rs500 crore.

“The government should facilitate transactions by quoting reasonable prices for this property. These huge figures (being quoted) during a slowdown in commercial space will not facilitate any transactions in this segment,” said Raja Kaushal, executive director and chief operating officer, BNP Paribas Real Estate. 

Currently, an area of around 10 million square feet (60% in suburban Mumbai and 40% in south Mumbai) of commercial space is available in the metropolis, according to BNP Paribas Real Estate.

“There is over-supply of office space in Mumbai, and it (sales) will take time to take off,” said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.

 “On a country-wide scale, the supply of new projects has doubled compared to last year, and the demand increased by 15% last quarter. In Mumbai, there is almost 50% over-supply of commercial real estate,” added Mr Kaushal.