The valuation of the 740-acre surplus land of erstwhile Videsh Sanchar Nigam Limited (VSNL), especially the 70-acre land at New Delhi’s upmarket Greater Kailash-I, has seen a significant rise.
While the asset comprises diversified land parcels, the Greater Kailash-I land is seen as the crown jewel. Real estate consultants and advisors estimate the value of the land at Rs 65-80 crore an acre, compared with Rs 55 an acre in 2011, a rise of about 45 per cent. The Department of Telecommuni-cations (DoT) had valued the land in 2011.
With the Cabinet approving the demerger of VSNL’s surplus land into a special purpose vehicle (SPV) called Hemisphere Properties India Limited (HPIL), the government, along with other shareholders, could raise about Rs 7,000 crore, according to current real estate market prices. Just a year earlier, the land was valued at about Rs 6,156 crore, about 17% lower. The government is expected to hold equity of 51.12 per cent in the SPV, while original VSNL shareholders could hold 20 per cent and non-promoters, including mutual funds and banks, could hold 28.8 per cent. The total surplus land, spread across Delhi, Chennai, Kolkata and Pune, after being demerged, would be sold at market prices. (Click for tables)
In 2002, Tata Communications had acquired a majority stake in VSNL for Rs 143.9 crore. Though the deal did not include the 740-acre surplus land, the Tatas had kept the land, owing to lack of clarity on how it could be demerged.
Brokerage firm Religare has valued the Greater Kailash-I land at about Rs 5,600 crore, or Rs 80 an acre. Another real estate research firm, Qubrex, estimated its value at Rs 4,600 crore, or Rs 65 an acre. “GK (Greater Kailash) is definitely the most lucrative asset on the list, and with 70 acres, an entire township can be constructed,” said Sanjay Sharma, managing director, Qubrex.
In a report on Saturday, Religare undervalued the 58-acre Chattarpur land at Rs 348 crore, or Rs 6 crore an acre, compared with Rs 1,511 crore (Rs 26 crore an acre) a year ago. Qubrex has, however, valued it at Rs 27 crore per acre.
“These valuations will eventually depend on the land use allowed,” Sharma said.
The land in Pune is spread across five different locations — Dighi, Kalas, Bhosari, Bhopkel and Dighi Defense — at a distance of just two to three km from each other, and the valuations range between Rs 1 crore and Rs 2 crore.
“Pune is a small place, and there is oversupply in the Pune market, leading to the lower market valuations,” said a consultant. A developer said since Pune had major projects of about 400-500 acres, builders already had enough land there.
Last year, DoT had valued the 53.44-acre land at Padianallur near Chennai at Rs 3.5 crore an acre. However, many believe it was overvalued. Religare has now estimated the value at Rs 1.5 crore an acre, while Qubrex estimates it at Rs 2.8 crore an acre. “It is hard to believe the land is over Rs 3 crore an acre, as the place is on the outskirts of Chennai and has a population of just about 20,000, according to the 2001 census,” says a Chennai based-developer.
Though some analysts say it would be difficult to sell the land banks due to the slowing economy, Sharma argued areas this big were sold in tranches over a long period, and it took 5-10 years to develop the land. Therefore, the effect of the economic cycle is diluted.
In 2003, DoT had valued the total land bank of 740 acres at just Rs 150 crore.
