A Rs 1,001 cr house for Mr Damani and other marquee realty buys in Mumbai

DMart promoter Radhakishan Damani has reasons besides snob value for buying plush Malabar Hill property, say experts

The reclusive and low-profile person that he is, billionaire investor and entrepreneur Radhakishan Damani seldom likes to be in the news.

But the recent Rs 1,001-crore property he along with his brother purchased in the plush Malabar Hill area of South Mumbai — home to the likes of Mukesh Ambani and Ratan Tata — made headlines. Veterans in the property market believe that Damani, the promoter of DMart, might have had his own reasons to go for the country’s most expensive residential property deal besides the snob value of the property.

Though property prices crossed Rs 1 lakh a sq ft in South Mumbai, Damani’s Rs 161,670 per sq ft for the bungalow, called Madhukunj, is an all-time record in the country.

First, since the stamp duty cut by the Maharashtra government was available till March this year, it helped Damani save around Rs 20 crore. Last year, the state government cut stamp duty from five per cent on property transactions to 2 per cent till December 31, 2020, and 3 per cent till March 31, 2021.

Secondly, experts believe that 1.5 acres, on which the property is located, is too large a space to live and can be developed and sold.

“An area of 60,000 sq ft is too large a space. Suppose he needs 20,000 sq ft, other areas can be redeveloped and sold for about 100,000 per sq ft. In that sense, the entire money spent can come back,” said Pranay Vakil, former chairman of Knight Frank India, a UK-based property consultant.

Damani, the fourth richest Indian with a net worth of $15.4 billion as per the Forbes India’s Rich List 2020, was raised in a one bed-room apartment in Mumbai. He resides in Altamount Road, another tony area of South Mumbai.

Kumar Mangalam Birla bought Jatia House in Malabar Hill for Rs 425 crore (Photo: Kamlesh Pednekar)

According to Vakil, like every successful businessman, Damani needs to park his money, and there is no better asset than real estate which is “so tangible and stable”.

The increased floor space index or FSI is another incentive to buy, said Vakil. FSI refers to permissible construction on a given piece of land. In the island city, the FSI has gone up to 3 from 1.33 in the last couple of years. “It makes business sense to buy it,” he added.

Sanjay Dutt, managing director and chief executive of Tata Realty & Infrastructure, believes that industrialists are buying these assets as trophies.

“They are not buying them to show off. These are in very prime locations that are very rare,” Dutt said.

For instance, billionaire industrialist Ajay Piramal bought the Gulita property from Hindustan Unilever in Worli Sea Face of Mumbai for Rs 452 crore in 2012.

In 2018, Kumar Mangalam Birla bought Jatia House in Malabar Hill for Rs 425 crore.

Dutt believes that in the last one year post-pandemic, people want to celebrate life. “If you are a successful entrepreneur and build an empire, and want to buy trophy assets, why not?”

Resilient market

Areas such as Altamount Road, Malabar Hill, Breach Candy and Napean Sea Road in South Mumbai, which house billionaires, are always in demand, say veterans in the property market.

According to Amit Goyal, CEO, India Sotheby’s International Realty, similar to other properties, the prices of such marquee properties have not gone up in the last eight to nine years. But the brokerage has seen slight firming up in the ask prices by sellers in the last few months. “Because the inventory is limited, it all depends on the desirability of an individual property where the price settles.”

Anuj Puri, chairman of Anarock Property Consultants, said that prices are set outside of the purview of ongoing market rates, and are largely based on scarcity and aspirational factors.

The number of big-ticket transactions has gone down but prices of such properties have not fallen, said Vakil. “It is a peninsula. There is no more land to be developed, so prices will go up.”

(Below: Jamshyd Godrej family acquired Homi Bhabha's bungalow on Malabar Hill for Rs 372 crore in 2014.)