No takers for Kingfisher House, re-auction likely

After the auction of the 17,000-square feet Kingfisher House located in Vile Parle held on Thursday at a base auction price of Rs 150 crore did not find any takers, the State Bank of India (SBI)-led SBI Capital Trustee Company, has decided to re-auction the property after consulting real estate experts.

An official from SBI involved in the auction process said, “We have decided to re-auction the property after consulting real estate experts, and the date for re-auction will be officially announced by the bank. The reason for not finding any takers could be because the pricing was decided by SBI representatives associated with the Bengaluru branch and they had no idea about Mumbai’s real estate market.”

Kingfisher House, owned by Kingfisher Airlines, was taken over by SBI in February 2015, for non-payment of Rs 6,963 crore, for which liquor baron Vijay Mallya is a guarantor. The SBI had last month announced that it will auction the said property under The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002, at a base auction price of '150 crore. Real estate experts were sceptical, citing the quoted price of the property as overvalued. On top of all this, Kingfisher House also comes with an outstanding property tax of Rs 67 lakh.

Vikram Mehta, a real estate broker who deals with properties in Bandra-Kurla Complex (BKC), said, “In the current slowdown of the market, I have a seller who is ready to sell his 9,500 square foot office space at BKC, quoting the rate of Rs 26,000 per square foot as there are no takers. In this case, we cannot expect Kingfisher House to be sold at Rs 90,000 per square foot.”

According to real estate experts, one of the major reasons for there being no takers is the height restriction, as Kingfisher House is in the vicinity of the airport. No developer would get permission to construct a residential property in the area as the Floor Space Index (FSI) granted near the airport is 1, which means a structure that is over four storeys will not be allowed.

The Directorate General of Civil Aviation, had suspended Kingfisher Airlines’ operating licence in October 2012 following a strike by the airline’s employees, along with huge losses and liabilities – including to the lenders.