Core Projects may buy Rs 350-cr Andheri property

The saga of buying out high-end office space in Mumbai continues. In a latest development, Mumbai-based education company, Core Projects and Technologies, is in talks with the leading plastic goods maker Supreme Industries to buy out the office property developed by the latter in the Andheri area of Mumbai. The deal could be worth Rs 350 crore (Rs 3.5 billion) in value, said sources close to the development.

If this deal concludes, it could become one of the largest office space sale transactions in Mumbai this year.

US banking major Citibank has reportedly bought 300,000 sq ft space in a building developed by NRI investor Purnendu Chatterjee and US-based Vornado Realty Trust for Rs 1,000 crore (Rs 10 billion) in Bandra Kurla Complex (BKC) in Mumbai. Citibank paid Rs 33,333 a sq ft.

The deal is expected to get closed within a month. The property is located off Veera Desai Road in Andheri West.

The Rs 2,000-crore (Rs 20-billion) Supreme Industries had sold 40,000 square feet of office space in the building to film production house Eros and a private individual for Rs 60 crore (Rs 600 million) earlier this year and looking to generate around Rs 350 crore (Rs 3.5 billion) for the remaining 2,25,000 sq ft of the property. At this rate, it comes to Rs 15,555 a square feet.

Sanjeev Mansotra, chairman and global CEO of Core Projects said the company was looking at consolidating its properties and setting up new corporate headquarters in one place in Mumbai.

"We are in

talks for office space but nothing has finalised yet," Mansotra said.

Core has a 200,000 sq ft development centre in Navi Mumbai and two more centres in SEEPZ special economic zone in Andheri and Hyderabad. The new property is expected to help Core Projects in consolidating its properties and reduce costs.

On Friday, shares of Rs 515-crore (Rs 5.15 billion) Core Projects closed at Rs 301, down by 0.53 per cent on BSE.

When contacted, MP Taparia, managing director of Supreme Industries said he would not like to comment on speculations on the property.

Unlocking value from real estate is crucial for Supreme Industries in its plans to reduce its debt and fund its Rs 270-crore (Rs 2.7-billion) capex plans in 2011-2012.

According to realty consultants, sale transactions have gone up in suburban Mumbai as prices have stagnated and vacancy levels remain high.

"Transactions have increased, but rates have not gone up as still there is a significant vacancy in the market," says Ashok Kumar, principal and managing director, CreasaPartners, a commercial realty services firm.

In 2010, a number of financial institutions bought space in Mumbai. For instance, banking major Axis Bank bought office property from Wadia group for Rs 640 crore (Rs 6.4 billion).

In mid-2010, Edelweiss Broking bought 200,000 sq ft space in Lotus Midtown in Kalina for Rs 410 crore (Rs 4.1 billion).

"When financial institutions buy properties, it will have a trickle down effect as most of the sectors are dependent on it," said Raja Seetharaman, national head of agency leasing at property consultancy Jones Lang LaSalle.