A change in the compensation structure has resulted in foreign banks selling their prime residential property across the country.
After the record sale of the prime residential property at Mumbai's National Centre for the Performing Arts (NCPA) for Rs 34 crore (Rs 340 million), Citibank has now put on sale yet another residential property on Altamount Road in south Mumbai.
CB Richard Ellis (CBRE), the real estate consultancy firm, is handling the transaction, for which a floor price of Rs 32,000 per square foot has been fixed.
"Like many other multinational organisations, we periodically review our surplus residential estate portfolio in relation to employee requirements as the preference is towards a flexible remuneration policy," said a Citi spokesperson.
Recently, foreign banks like Deutsche Bank and American Express Bank also sold some of their residential property. In 2006, HSBC was the first foreign bank to migrate to a cost-to-company-based (CTC) compensation structure.
Earlier, foreign banks, as a part of the compensation package, provided housing facility to employees. A majority of the foreign banks have been migrating to an all-cash compensation structure.
"HSBC has sold some of its residential property in the past. However, we continue to hold on to some for expatriates, who come on assignments to the country,'' said a spokesperson.
The second most-talked-about property deal in banking circles is that of Rakesh Jhunjhunwala, the stock broker, buying an apartment from American Express Bank in Mumbai's Malabar Hill for about Rs 25 crore (Rs 250 million).
"Foreign banks now prefer to give their employees a fixed cash compensation every month, which the employees could use to pay the house rent or the installments of a home loan. Most of the bank offices have now shifted to suburbs and employees prefer to live in apartments close to workplace," said a foreign banker.
"A majority of the residential property owned by foreign banks are located in South Mumbai, which is far from the workplace. Nobody wants to stay in these houses and the organisation carries a fixed asset on its book.
"The sale of flats also helps us unlock value and releases capital," added the foreign banker.