MUMBAI: In the largest commercial property deal in India, the Essar Group has acquired Peninsula Land’s (PLL) Kurla commercial project for about Rs 1,200 crore. Peninsula Land sold approximately 9 lakh sq ft of commercial space to Essar Realty Holdings at its upcoming Peninsula Tech Park project in the Swan Mills compound at Kurla in central Mumbai for Rs 14,000 per sq ft.
The deal is slightly bigger than Reliance Industries’ purchase of convention-cum-commercial space at Bandra-Kurla complex for Rs 1,100 crore last year. Essar Realty is expected to use this property to house its group companies. Currently, Essar has several offices in Mumbai apart from Essar House, located at Mahalaxmi. The group is planning to consolidate its operations under one roof to save costs. The Essar Group has interests in shipping, steel, telecom, power and engineering.
Essar Realty Holdings CEO Cherag Ramakrishnan confirmed the deal to ET. “We have acquired the property. We are continuously scouting for more opportunities in Mumbai and other parts of the country,” he said. PLL vice-chairman and MD Rajeev Piramal declined comment.
“As per the agreement between PLL and Essar Group, PLL will develop and hand over an IT Park in Swan Mills compound. The payment will be based on the progress of the work,” a source said.
A few months ago, PLL had sold 5.75 lakh sq ft in Dawn Mills in Lower Parel to Alok Infrastructure, the wholly-owned subsidiary of integrated textile company Alok Industries, for Rs 1,075 crore. Alok Industries paid around Rs 20,000 per sq ft for the plot.
Industry analysts pointed out that pre-sales of commercial properties is rapidly catching up in Mumbai, which is facing an acute space shortage. Developers are selling properties at bulk rates to raise funds.
Recently, Swan Mills decided to launch commercial and residential real estate projects in the city with a total saleable area of 1.85 million sq ft. It had identified a residential project at Sewri and a commercial project in Kurla. Both projects have different saleable areas; 9.5 lakh sq ft for the Sewri project and 9 lakh sq ft for the Kurla project. Swan Mills has tied up with PLL to develop and market the project to potential buyers. Both are scheduled to be completed by March 2009.
Similarly, PLL is also developing office space with a total saleable area of 1.1 million sq feet in Dawn Mills, which the group acquired two years ago.
PLL now owns around 32 million sq ft of land and has already developed 5.5 million sq ft in Mumbai alone. PLL has also extended its presence to Hyderabad, Pune and Goa. The company develops residential projects under the brand name Ashok and operates under the PLL brand for office space projects.
The Indian real estate market is growing rapidly thanks to a booming economy and surging demand for corporate and residence space. Heavy investment by global funds and expansion plans of companies have driven up land values, stoking fears of a property bubble.
According to property consultant DTZ, Mumbai is the only city facing an office space shortage among major cities. While 6.4 million sq ft of office space was absorbed in Mumbai in 2006, the market is expected to absorb 7.5 million sq ft office space in 2007 against the availability of 6.9 million sq ft this year, resulting in a supply-demand gap of 0.6 million sq ft, DTZ said.
The deal is slightly bigger than Reliance Industries’ purchase of convention-cum-commercial space at Bandra-Kurla complex for Rs 1,100 crore last year. Essar Realty is expected to use this property to house its group companies. Currently, Essar has several offices in Mumbai apart from Essar House, located at Mahalaxmi. The group is planning to consolidate its operations under one roof to save costs. The Essar Group has interests in shipping, steel, telecom, power and engineering.
Essar Realty Holdings CEO Cherag Ramakrishnan confirmed the deal to ET. “We have acquired the property. We are continuously scouting for more opportunities in Mumbai and other parts of the country,” he said. PLL vice-chairman and MD Rajeev Piramal declined comment.
“As per the agreement between PLL and Essar Group, PLL will develop and hand over an IT Park in Swan Mills compound. The payment will be based on the progress of the work,” a source said.
A few months ago, PLL had sold 5.75 lakh sq ft in Dawn Mills in Lower Parel to Alok Infrastructure, the wholly-owned subsidiary of integrated textile company Alok Industries, for Rs 1,075 crore. Alok Industries paid around Rs 20,000 per sq ft for the plot.
Industry analysts pointed out that pre-sales of commercial properties is rapidly catching up in Mumbai, which is facing an acute space shortage. Developers are selling properties at bulk rates to raise funds.
Recently, Swan Mills decided to launch commercial and residential real estate projects in the city with a total saleable area of 1.85 million sq ft. It had identified a residential project at Sewri and a commercial project in Kurla. Both projects have different saleable areas; 9.5 lakh sq ft for the Sewri project and 9 lakh sq ft for the Kurla project. Swan Mills has tied up with PLL to develop and market the project to potential buyers. Both are scheduled to be completed by March 2009.
Similarly, PLL is also developing office space with a total saleable area of 1.1 million sq feet in Dawn Mills, which the group acquired two years ago.
PLL now owns around 32 million sq ft of land and has already developed 5.5 million sq ft in Mumbai alone. PLL has also extended its presence to Hyderabad, Pune and Goa. The company develops residential projects under the brand name Ashok and operates under the PLL brand for office space projects.
The Indian real estate market is growing rapidly thanks to a booming economy and surging demand for corporate and residence space. Heavy investment by global funds and expansion plans of companies have driven up land values, stoking fears of a property bubble.
According to property consultant DTZ, Mumbai is the only city facing an office space shortage among major cities. While 6.4 million sq ft of office space was absorbed in Mumbai in 2006, the market is expected to absorb 7.5 million sq ft office space in 2007 against the availability of 6.9 million sq ft this year, resulting in a supply-demand gap of 0.6 million sq ft, DTZ said.
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