Kingfisher House on sale

Located near the domestic airport at Mumbai’s Vile Parle area, The headquarter of defunct Kingfisher Airlines popularly known as the Kingfisher House is being put up for e-auction by State Bank of India through which interested buyers will bid for it online. The base price for this multi-storey building, with a built up area of over 17,000 sq.ft, has been set at Rs.150 crore. The property is expected to generate interest among corporate houses and retailers, mainly because of its proximity to the highway.

Although not a very large property, Kingfisher House will find buyers mainly because of its strategic location for many businesses specially related to aeronautics, airlines-related businesses, logistics or even corporate houses and banks.

However, real estate advisers feel that the price of the property as quoted by the auctioneer is on the higher side. It is way above the market rate around the area where the Average commercial property rates in and around Vile Parle is at about Rs.28, 000 per sq.ft, according to various online property listings.

In February 2015, a consortium of 17 banks led by the country’s largest public sector lender State Bank of India (SBI) had taken possession of Kingfisher House in a bid to recover loans granted to the airline. Last month, SBI Capital Markets Ltd (SBICap), an investment bank unit of SBI, issued a public notice saying the property would be sold through an e-auction.

As per the notice for this e-auction, Kingfisher House also has unpaid dues of property tax of Rs.67 lakh.

SBI is planning to include Kingfisher House on its next e-auction block

After getting unexpected response from its mega auction of Rs 1,200 crore worth properties belonging to defaulters, now SBI is planning to include Kingfisher House on its next e-auction block for the next round. On last Friday, State Bank of India put the block 300 pieces of residential, commercial and industrial properties across the countries which it had attached from defaulters in a bid to recover bad debts.

Till now SBI was selling its assets of defaulters in a piecemeal basis, but the problem was that most of the response was coming from localized and specific group of people who specialized in purchasing stressed assets at a discount price. In present economy is turning around and due to that now banks are hoping that investors from all over the country will be drawn to mega auction there will be a genuine price discovery based on demand and supply. According to Deputy Managing Director of SBI, PK Malhotra, “It was too early for us to include and put the Kingfisher House in the e- auction and now we are planning to include this during the next auction. Like other we are also looking for good business house to buy it rather than have a reseller come in. Our valuation of this was quite dated and now we are doing a fresh valuation which is expected to be through in a couple of days.

The latest e-auction included residential units as well as industrial plots from all over the country. While there was a good response to the residential properties, now SBI expecting some work on the larger industrial plots. According to Malhotra, “We are expecting to get over 10 to 14 per cent (over the asking price). Few of the industrial properties are very good with the entire infrastructure available. It is like a `plug and play’ asset for any entrepreneur.”

It is expected that these e-auctions and valuation of assets will add few hundred crores to SBI’s bottom-line for the third quarter as successful bidders have to make full payment by March 29 2015. As per the statement of Malhotra, there was good interest in the bank’s auction because the properties have clear title and buyers see value in them. The extent of profits would depend on the level of provisions made by the bank. If the asset has been fully written off the entire realizations would add to the banks bottom-line.