Rail authority to form JV for Mumbai plot

Bangalore: The Rail Land Development Authority (RLDA) is likely to form a joint venture (JV) for its plot of land near the Bandra-Kurla Complex (BKC), a business district in Mumbai, following a consultation with potential bidders, a top official said.

The estimated reserve price for the land auction is Rs4,000 crore.

RLDA, which had earlier failed to lease the 45,300 sq. m plot for an 80-year period, met 28 developers, including DLF Ltd, Unitech Ltd, Emaar MGF Land Ltd and DB Realty Ltd on Friday.

Most of the developers at the meeting pitched for a JV with a revenue-sharing model between RLDA and the successful bidder, said A.K. Gupta, general manager (projects) at RLDA.

The authority hopes to float the bids soon after it designs the structure of the venture, Gupta said, without specifying a deadline. The auction was originally planned for March.

The attempt to get feedback from potential bidders before the auction comes in the backdrop of last year’s liquidity crunch and a failed land auction at BKC earlier this month by another entity due to steep prices, say property consultants.

“The JV model will work well for developers because they don’t have to put in high capital investment initially and can put in money in phases,” said Param Desai, a research analyst with Angel Broking Ltd. The revenue-sharing system will also allow for the profits to be distributed between the two parties, he said.

RLDA was constituted in 2006 to develop vacant railway land for commercial use.

Gupta said the idea to informally meet the developers was not how most government organizations worked. “We have always followed a unilateral structure for bids, which was one-sided. But now we think it’s important to involve the other side and incorporate their suggestions too,” said Gupta.

RLDA, which is looking to sell land in Kolkata, Chennai, Aurangabad and Jamanagar, is holding similar sessions with potential bidders for those plots as well.

A Mumbai developer, who was present at the Friday meeting with RLDA, said the fact that a part of the land is embroiled in litigation is a bit of a dampener. “If the land title is clear and the joint venture model is reasonable, we will bid for it,” he said on condition of anonymity.

The previous big-ticket land auction was by the Mumbai Metropolitan Region Development Authority on 3 March, when not a single bid was submitted for a BKC plot priced at Rs3 lakh per sq. m.