National carrier Air India’s efforts to monetise its real estate assets have hit an airpocket yet again. The company’s latest attempt to sell its prime residential property in Mumbai has found no takers.
It was a no show at the e-auction held on October 18 for one of the four Peddar Road (in South Mumbai) flats that was put on the block. Air India had set the minimum reserve price of Rs 27.5 crore for the 3BHK flat of 2,033 square feet. The steep reserve price, according to property consultants, proved to be a deterrent.
In all probability, Air India would now have to bring the reserve price down to about Rs 22 crore in the fresh auction, sources close to the development, said. The matter will now be referred to Air India’s special committee that oversees monetisation of its real estate assets. It is expected to meet in the next few days to decide on the next course of action.
Options
“The options before the committee include lowering the reserve price for this flat and the other three flats or adopt a wait-and-watch policy to see if the response improves,” said a person in the know of development.
In the run up to the e-auction process, which was conducted on October 18, several investors had evinced interest.
An Air India official said that the company is confident of getting buyers. “If you go by some of the deals that have happened in the recent past in that area, we believe that the price we are expecting is justified. It is just a matter of time,” he said.
According to property consultants, the estimated market price of residential property in Peddar Road would be between Rs 50,000 to Rs 1.5 lakh per square foot .
Amit Bhagat, CEO and Managing Director, ASK Property Investment Advisors, said: “For a property such as this, which is going to cost between Rs 27 crore to Rs 30 crore, buyers would be looking to get a much larger apartment than the 2,033 square feet being offered. “So, there seems to be a mismatch between the price and the space offered, which could explain the poor response to the bid.”