Alok Inds inks mega land deal in Mumbai

Buys 5,75 000 sq ft of office space for Rs 1,075 cr.

Alok Infrastructure, the wholly-owned subsidiary of the integrated textile company Alok Industries, has bought 5,75,000 sq ft of office space in Mumbai for Rs 1,075 crore. This is the city's second-largest land deal and the country's fourth-largest.

The Ashok Piramal group's Peninsula Land was the seller of the property at Dawn Mills in Lower Parel. The largest deal in the city so far has been Reliance Industries' acquisition in Bandra Kurla Complex for Rs 1,100 crore.

However, the Alok-Peninsula deal appears to be the costliest among big deals. Alok paid Rs 17,000 per sq ft while DLF paid Rs 10,151 per square foot yesterday for 39 acres of land from DCM Shriram and the Lohias for Rs 1,675 crore in New Delhi. The DLF-DCM deal was the country's largest.

The valuation of the property is nearly doubled even before Alok pays the entire consideration to the Piramals. As per the agreement, Alok paid Rs 100 crore and is supposed to pay the balance in three years. Recently, a deal has been taken place for Rs 32,000 a sq ft in the same mill area.

Sources close to the development said Alok Infrastructure would either sell or lease out the property. Alok Industries' Managing Director Dilip Jiwrajka had recently told Business Standard that he hoped that the infrastructure business would be one of the main money spinners for the group. In addition to the lease rental business, the infrastructure arm of Alok is also setting up a 200 acre SEZ at Silvasa.

Alok also bought office premises measuring 65,000 sq ft at Ashford Centre in Lower Parel for Rs 70 crore, which is being developed by Ashford Universal.

The Ashok Piramal Group's Peninsula Land is developing office space with a total saleable area of 1.1 million sq feet in Dawn Mills which the group acquired two years ago.

Pre-sales in commercial properties is rapidly catching up in Mumbai which has an acute shortage of space. Developers are selling off their properties at bulk rates to raise funds for their development.

According to property consultant DTZ, Mumbai is the only city facing an office space shortage among the major cities.

While 6.4 million sq ft office space was absorbed in Mumbai in 2006, the market is expected to absorb 7.5 million sq ft office space in 2007 against the availability of 6.9 million sq ft this year, resulting in a supply-demand gap of 0.6 million sq ft, DTZ said.