INDIA: NTC looks at Bangalore, Indore for land auctions

High on the sweeping response to its land sale last week in Mumbai, National Textile Corp. Ltd (NTC) plans to put up three more defunct textile mill lands in Bangalore and Indore for auction.

By end-September, NTC will put up for sale two sick cotton textile mills' land—of 1.73 acres and 30 acres—on Magadi Road in west Bangalore at a combined minimum price of Rs340 crore, chairman and managing director K. Ramachandran Pillai said on Wednesday. In another two weeks, it will put up a 20-acre mill property in Indore for sale for an estimated Rs90-100 crore. All the three plots will be sold through electronic auctions.
By end-September, NTC will put up for sale two sick cotton textile mills' land—of 1.73 acres and 30 acres—on Magadi Road in west Bangalore at a combined minimum price of Rs340 crore, chairman and managing director K. Ramachandran Pillai said on Wednesday. In another two weeks, it will put up a 20-acre mill property in Indore for sale for an estimated Rs90-100 crore. All the three plots will be sold through electronic auctions.

In the three-day sale ended on Saturday, NTC fetched Rs474 crore for the 2.39-acre Poddar Mills (Process House) land in Mumbai's Worli area, far higher than the reserve price of Rs250 crore.

Indiabulls Infratech Ltd beat seven bidders to buy the property through an online auction, a first for NTC.

"The NTC land prices are unrealistic, unsustainable and is more about a handful of developers trying to outbid the other," said Amit Goenka, national director, capital transactions, Knight Frank India, a property advisory. "This will have a negative impact on the market dynamics because properties developed on land bought at such prices can't be aimed at normal homebuyers."

Land transactions have risen by leaps and bounds since the beginning of 2010, but are largely restricted to Mumbai.

In the last week of July, Mumbai-based Sheth Developers Pvt. Ltd bought an 18-acre plot of Borosil Glass Works Ltd factory in suburban Andheri for Rs875 crore. In February, it had bought a land parcel in Mumbai for Rs591 crore. And in one of the biggest land deals in recent times, Lodha Developers Ltd in May bought a plot in Wadala for Rs4,053 crore.

On Wednesday, NTC started an online sale of its 8.38-acre Bharat Textile Mill property in central Mumbai. On the second day of the three-day auction, the bid price reached Rs1,175 crore, against a reserve price of Rs750 crore. Among the seven bidders in the fray for the property are DB Realty Ltd, Indiabulls Infra Estate Ltd, Peninsula Real Estate Management Ltd and Videocon Realty and Infrastructure Ltd. The auction ends on Friday and, according to analysts' forecasts, should reach Rs1,500-1,600 crore.

NTC's Pillai said he hopes the Mumbai land sales will be benchmark prices for the future, particularly with the real estate sector on its way to a recovery after the downturn.

Knight Frank's Goenka said he isn't sure if expensive land auctions would be sustainable in cities such as Bangalore and smaller cities such as Indore.

"Smaller cities are more conservative about land sales and the response to these may not be as overwhelming as in the case of Mumbai," said another property consultant, who didn't want to be named.


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Added: August 6, 2010 Source: Agencies
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