The Hindu Business Line : HSBC sells Chennai property for Rs 42 cr thru e-auction

RUNNYMEDE, a 28,000 sq ft property belonging to the Hongkong and Shanghai Banking Corporation, in the upmarket Boat Club area of Chennai was today sold for about Rs 42 crore, through an electronic auction. The name of the successful bidder was not disclosed.

This works out to about Rs 3.5 crore a ground (2,400 sq ft) or Rs 14,833 a sq ft, which, real estate industry sources say, is sure to push up prices further in the city.

However, neither officials from HSBC or C.B. Richard Ellis, the international property management consultancy firm that conducted the e-auction, were available for comment.

According to reliable real estate sources, there were at least 25 bidders when the auction began. However, after the figure crossed the Rs 30-crore mark, only two bidders were in the fray. Any one interested in the property could participate in the e-auction, for which they had to pay a deposit and register with the consultant. The bidders included a number of individuals who were looking to buy the property for their personal use.

According to the sources, the bidding was quite hectic with active participation by almost all the bidders till the bid amount reached Rs 30 crore. In the e-auction, the bidder has to register his or her price online and if there is no competing bid within five minutes, the last bid is taken as the final one, according to the sources.

Mr C. Subba Reddy, Managing Director, Ceebros Property Development Pvt Ltd, who participated in the auction, said he was looking to buy the property for his personal use. (Ceebros constructs apartments in the top end of the market. It also runs a hotel in Chennai and has plans to develop two more.)

HSBC has adopted the e-auction route to sell some prime properties it owns in Mumbai, Chennai, Bangalore and Kolkata. The e-auction was first conducted for three flats in upmarket Malabar Hill area of Mumbai. In August last, HSBC officials had said that the bank decided on the e-auction route for the transparency of the bidding process and the speed at which the deals can be completed.

When the bank announced auction of the Chennai property a few months ago, real estate industry sources had said that a ground (2,400 sq ft) could fetch up to Rs 2 crore in the Boat Club area.

The real estate sources now say this price will push up land prices. This is bound to set a benchmark and landowners will want to hold on to their properties waiting for prices to go up, the sources say.

Mr Ramesh Nair, Associate Director - Corporate Solutions, Jones Lang LaSalle India, an international real estate consultancy firm, said that never before had land prices risen so fast in Chennai. "It seems like every month brings new highs in property prices driven by aggressive financing arrangements from financial institutions and real estate funds that encourage and enable such high priced real estate transactions."

Pointing out that salaries were not increasing at the same pace at which property prices were going up, Mr Nair cautioned that if employment rates were to fall due to an economic slowdown, housing prices would soften and eventually drop. And, those who had invested in property were likely to sell, pushing up availability and depress prices.

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