Deals in city and suburbs
Land deals in Mumbai and its suburbs have dried up as buyers, wary of legal and regulatory hurdles, refuse to put up the money demanded by sellers, industry officials and analysts said.
The demonetisation exercise and the crackdown on black money haven’t helped either.
Last month, drugmaker Glaxosmithkline Pharmaceuticals Ltd cancelled bids to sell 64 acres in Thane for around ₹1,500 crore, two people aware of the development said.
This is the second time GSK is scrapping the sale, after attempting it first in 2014. Large Mumbai builders including Oberoi Realty, Piramal Realty and Wadhwa Group were interested in the plot, but the deal failed as buyers, wary of pending government permissions, were not willing to pay what GSK wanted, two people involved with the development said.
One of the bidders said on condition of anonymity that GSK has returned the bid deposits. The Wadhwa Group confirmed that bidding was put on hold. GSK declined to comment.
“Being a big land parcel, it had a few government permission issues including urban land ceiling (ULC) clearance, conversion from industrial to residential land and labour NOC ( no objection certificate). So, because of all the risks involved with the land, there is a big margin between final net value offered by the bidders and what was being quoted earlier,” said Vrushank Mehta, head (corporate strategy and land acquisition), Wadhwa Group (BKC), there won’t be any immediate land deals either. Last August, the Mumbai Metropolitan Region Development Authority (MMRDA), which is developing the financial district, cancelled the auction of a 3.08 acre commercial plot valued at around ₹1 400 crore as it could said the plot was over-priced and given an ongoing construction ban, it was not worth the risk.
On February 29, 2016, the Bombay High Court had banned all new construction in the city, citing failure of the government authorities to comply with waste management rules.
“Most of the land deals in Mumbai are stuck because of two reasons. One is the (Bombay) High Court order. Secondly, the Development Control Rules (DCR) are ever changing. So, for high-value deals that can make or break a company, they are unable to take a call. There is confusion over how to buy land and how to price it,” said Shobhit Agarwal, MD (capital markets) at JLL India a property