GVK Mumbai International Airport Limited has inked a commercial property development deal with Oasis Realty for Rs 580 crore. Sanjay Reddy, vice chairman, GVK Power says the deal comes as the realty sector is seeing signs of revival under the Modi-led government.
“We sold the land for Rs 5000 per square feet and we hope to get a better rate in the upcoming deals,” adds Reddy.
Reddy says the company will be focusing on real estate development and this pact is only the first step towards monetizing value at the Mumbai Airport. The company is looking to monetize about 2 million square feet of land of the total 22 million they own.Below is the edited transcript of Sanjay Reddy's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Can you confirm what have you all been able to achieve in terms of commercial deals with the MIAL land?
A: We finalised the deal a few days ago, the first major transaction for nearly 1.1 million square feet with the payment of Rs 580 crore. This is significant because of the fact that since Mumbai Airport operations started, real estate development has been a key part. However, we are first focusing on the airport development. We have completed the land-side and the air-side work and also the Terminal2 (T2) which went operational this year.
Hence now, we are going to focus on real estate development and we have a significant quantum of real estate development nearly 22 million sq ft and this is just a first step towards monetising land value in Mumbai Airport.
Sonia: Any more deals that are in the offing within this calendar year itself?
A: Yes, I think so. But what has happened is that there are number of parties who are in discussions with us but we thought first let us start with one and then depending on the market, we will then take a decision on the other requirements. Basically as you know, last year real estate has not been in such good shape but after the Modi government has come into being then things have improved a lot. So, now there is a lot of excitement because in Mumbai, after Bandra-Kurla Complex (BKC) our company has the maximum amount of land parcels.
Latha: What is the plan, how do you plan to spend the money, will it largely be used to retire debt?
A: As far as project cost is concerned, we have about Rs 1,000 crore that the regulator has specified that we should generate. So the first Rs 1,000 crore will go towards that. So this is the first step towards closing that because by next year June, we will shift even domestic so project will get completed by next year. So this is very critical for us on two counts. One is to complete that gap but more importantly, we also showed to the investors and analysts that real estate development has started.
Latha: So this is the equity contribution that you have to bring to the construction?
A: Correct.
Sonia: Out of the remaining 22 million sq ft of land that you spoke to us about, how much further monetisation could we expect in this calendar year?
A: This calendar year originally, we had planned for 2 million sq ft but depending on the market, depending on the need, we could do more or less. There is sufficient demand and enough people who have been discussions with us but we have to do it in a timely manner. So the general target has been around 2 million sq ft.
Sonia: What is the rate at which this particular transaction has been done and is it a rate that you are looking at for the other transactions as well?
A: First transaction normally is the one where you -- it sets a benchmark at the lower level. So we have done this at Rs 5,000 a sq ft and now further transactions we hope to be able to do better than that.
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