The Hindu Business Line : IDBI cancels e-auction of 1 lakh sq ft space

Industrial Development Bank of India (IDBI) has cancelled the proposed online auction of about 1,00,000 sq ft of space in the Boat Club area due to lack of response, according to high-level bank sources.

Similarly, the auction of a high-value commercial property on the Old Mahabalipuram Road (OMR), which was to be conducted by CB Richard Ellis, international property consultants, has not gone through.

Real estate consultants said that there is a general resistance to the soaring land prices in the city and it would lead to cooling off of real estate values.

IDBI reserve price

IDBI had quoted a reserve price of Rs 132 crore and called bidders to submit applications with an earnest money deposit of Rs 50 lakh by July 17. However, there was only one bidder who submitted the application with the earnest money deposit, sources said.

Mr Ramesh Nair, Local Director, Jones Lang LaSalle, international property consultants, said that the availability of developable land in Chennai city especiallyin high residential areas, such as the Boat Club, is limited leading to an increased demand for land in prime locations.

However, it is certain that the rate of price rise, seen in the last one year will definitely not continue, he said.

To study market

Sources at IDBI said that it would study the market conditions before deciding on the next course of action.

The upset price for the 6.92 acres at Sholinganallur was Rs 94.50 crore (Rs 13.65 crore an acre). This was a sealed bid auction and the last date for the bids to come in was July 26, according to information available on the CB Richard Ellis Web site.

The land reportedly belongs to a company that has developed some property for the information technology industry in the same area.

Mr N. Ananthanarayanan, Associate Director, Trammell Crow Meghraj Pvt Ltd, international property consultants, said that it was not commercially viable for an investor to buy at this price.

Uptrend in rentals

Though lease rentals have shown an upward trend, the developer would not find that kind of the return on investment. The current lease rentals on the OMR are between Rs 33 and Rs 36 per sq ft. To make the project viable, the lease rental would have to be at least Rs 45 per sq ft, he said which would be difficult to get.

Compare these prices to those the two previous e-auctions fetched. Recently, the TVS group sold 55,344 sq ft of vacant land on Boat Club Road through an e-auction for a little over Rs 80 crore. A year ago, Hong Kong and Shanghai Banking Corporation (HSBC) set the trend when it went in for an e-auction for four of its prime properties in Mumbai, Chennai and Kolkata.

In November 2005, HSBC sold its 28,000 sq ft residential property in Chennai called Runnymede, also in the Boat Club area, for Rs 42 crore.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Pvt equity firms bullish on financial services sector

Rupee slips against dollar

Oracle to make open offer for 20 pc in i-flex

FSS solution for Colombo bank

Top-level shake-up imminent at Peerless

LIC cover for 22 lakh BPL families

States park Central funds in short-term gilts

IDBI cancels e-auction of 1 lakh sq ft space

LVB unveils loan, deposit products

Parliament passes G-Secs Bill

Bond prices fall slightly

Call rates unchanged