Property developer Housing Development & Infrastructure (HDIL) has sold a commercial building project in Andheri in the western suburb of Mumbai to a private company, Mack Star Marketing, for nearly Rs 900 crore (Rs 9 billion).
The project, named Kaledonia, has nearly 0.5 million sq ft of commercial space and HDIL has sold the space at around Rs 18,000 per sq ft.
According to property consultants, HDIL sold the space at a reasonable price as Andheri has similar rates going on at present.
"The price looks justified if you look at the prevailing prices. However, we are not sure whether the price growth is sustainable in the long term," said Ashutosh Limaye of property consultancy Jones Lang LaSalle Meghraj.
HDIL had completed nearly 80 per cent of the project and made a profit of 70-75 per cent before tax, sources close to the development said.
HDIL bagged the project under the slum rehabilitation scheme three years ago, which had a total of one million sq ft of space with 0.5 million sq ft being a part of slum rehabilitation and rest for the developer.
"We found good value in the price being offered and hence we went with the sale. Turnover for the project will be accounted for in the current quarter,' said Hariprakash Pande, Vice-President, finance, HDIL.
On the news, the company's stock went up 0.71 per cent or Rs 5.85 in Thursday's stock market.
HDIL, a part of the Wadhawan group, has a land bank of 132 million sq ft in the Mumbai region. The company posted a turnover of Rs 1,444 crore (Rs 14.44 billion) and Rs 702 crore (Rs 7.02 billion) of profit after tax for nine months ended 2007-08. HDIL has been shortlisted for the Dharavi slum rehabilitation project with investment bank Lehman Brothers.
Mumbai faced a shortage of office space in 2007 and office rentals shot up by 20-30 per cent in the prime business locations. However, nearly 15 million sq ft of office space is expected to hit the market in 2008, which is likely to cool the prices.
