From Asian Age
The State Bank of India’s quotation to auction the 17,000-square-foot Kingfisher House, headquarters of Kingfisher Airlines, according to real estate experts, is a very overrated valuation of the property. With the base auction price at Rs 150 crore, real estate agents pointed out that buying a commercial property of that size even in prime office hubs like Bandra-Kurla Complex would be significantly cheaper. The bank on Friday announced that it would auction industrialist Vijay Mallya’s properties that it had in its possession since 2015 as he had defaulted on loans “Quoting a base price of Rs 150 crore means the SBI is asking for something between Rs 88,000 to Rs 90,000 per square foot. This is more than twice the actual market rate of the area, which is currently at around Rs 33,000 to Rs 40,000 per square foot,” said Vikram Mehta, president, Confederation of Real Estate Broker’s Association Of India (CREBAI), adding, “In fact SBI’s base price is higher than the rate of buying a property of the same size in a prime office area like BKC, which is currently at Rs 45,000 to Rs 65,000 per square foot.”
Another real estate expert Ajay Chaturvedi also pointed out that since the property was located close to the airport, the SBI cannot expect any private developers to bid for the project because there are height restrictions, adding that it would be hoteliers who were most likely to be interested in the auction.
“Though the property is in a prime location on the Western Express Highway (WEH), it will struggle to find buyers. The biggest reason for that is because of the height restrictions as it is in the vicinity of the airport,” said Mr Mehta. He further added that no developer would get permission to construct a residential property in the area.
The height restrictions near airports are imposed for two reasons. The area falls in the trajectory of the runway and tall buildings could be a hindrance in take-offs and landings. Secondly, the restrictions are imposed so that there is no interference with radar signals. The Floor Space Index (FSI) granted near the airport is 1, which means a structure that is over four storeys will not be allowed. The Directorate General of Civil Aviation, following a strike by the airline’s employees, suspended Kingfisher Airlines’ operating licence in October 2012. Mr Mallya, back in 2012, had tried to sell off the property to a stockbroker, but the deal did come through place because of both parties not agreeing on a mutual price.
The auction is scheduled to be held on March 17.