Sluggish Real Estate Market prevented the AI’s Plan to monetize the vacant floors in its building at Nariman Point. The bid was postponed as there was no taker for the building.
Civil Aviation Minister Mr. Ajit Singh blamed the sluggishness existing in real estate sector as a factor which blocked AI’s Plan. Tough market conditions chased the takers away and there was no one willing to take up the floors at the declared rates.
The rentals at Nariman Point are said to be higher than that of Lower Parel or at Bandra Kurla Complex (BKC). These areas are recently more preferred as these areas charge lower rentals.
Air India barely uses 6 floors in its 23-story building. Three floors are already leased and the rest remains vacant. Based on the 2011- report of Jones Lang Salle, the Air India plans to raise an amount of Rs.5, 000-Crore approximately. However real estate experts and property consultants are of the opinion that the National Carrier will have to lower the amount for gaining any takers.
According to them Nariman Point has lost its prominence with the arrival of Bandra Kurla Complex and Lower Parel. The lower rate of these areas has attracted many while the higher rate of Nariman Point distracts many.
Despite the cold wind of sluggish real estate market Civil Aviation Minister Mr. Ajit Singh remained confident of achieving the desired amount through monetizing its real estate assets. The National Carrier expects to raise a fund of Rs.5, 000-Crore approximately.
Air India plans to monetize its real estate assets in Delhi and Mumbai. So far the National Carrier has received tepid response from the takers. As a first plan, the national carrier was about to bid 11 floors (total 1.6 lakh sq. ft.) at Nariman Point.
The National Carrier further had plans to shift its Headquarters to New Delhi. Air India also planned to lease out the entire building after their shift to the capital.
Mr. Singh said that the National Carrier will be able to carry out the monetization plan. He further added that a real estate consultant is already employed to carry out its plan.
Earlier Hindustan Unilever also faced a similar situation. The Hindustan Unilever was forced to lease its building at a lower rate than they demanded. The real estate experts say this would be the same which will befall on Air India as well. As the figures say the National carrier may have to lower the rate anyway.
