Japanese Firm Bags 80-Year Lease For Land In Mumbai Valued Over INR 2,000 Cr

With the Mumbai Metropolitan Region Development Authority (MMRDA), Japan's Sumitomo Corporation Group has signed a comprehensive leasing agreement for a nearly 3-acre land block inside of Mumbai's Bandra Kurla Complex (BKC), with a value above INR 2,067 crore.

Goisu Realty, a Sumitomo Realty & Development Company division, won the bid in 2019 and purchased this piece of property through an 80-year lease arrangement. To finish the sale, though, it took them more than four years.

According to media reports, this is the first piece of land auctioned by the authority in the last 12 years. Since 2007, the MMRDA has only given a few plots to specific government agencies.

This demonstrates Sumitomo's dedication to India and its financial center. Sumitomo recognised Mumbai as one of the top locations for one of its international office portfolios. The Japanese company views Mumbai as a crucial investment due to the prominence of BKC. The Japanese corporation has made a total of four commercial assets in Mumbai: three sites in BKC from MMRDA and one in Worli (in a deal with Bombay Dyeing, the flagship company of the Wadia Group). Once the buildings are finished, the BKC purchase will consist of around 2 million square feet of Grade A office space spread across two towers, while the Worli site has the potential to include more than 6 million square feet of commercial space.

The firm paid a stamp duty amounting to over INR 110 crores for the registration of this transaction. According to papers available by CRE Matrix, the deal was successfully finished on September 3.

In 2019, Sumitomo Corporation won the bid for the two adjacent plots, but the transaction is now complete. On the 12486 square meters (just over 3 acres) property at BKC, construction will be allowed to cover an area of 65000 square meters.

In the upcoming days, MMRDA plans to generate more funds of INR 3000 crores by monetizing lands in BKC. MMRDA has invited more bids for the lease of two more plots in the G block area of the business district.

Additionally, the authority intends to sell other plots in Mumbai, ranging in size, in the near future to raise money for a number of ongoing and future infrastructure and transport projects in the MMR. The authorities are still awaiting clarity on a rule governing successful plot bidders' purchases of additional floor space index (FSI).

The Urban Development Department is currently reviewing a report that was submitted by a group that was specifically charged with studying the FSI premium policy. 

Notably, Goisu Realty and Bombay Dyeing & Manufacturing Co. recently signed a contract under which the former would pay the latter INR 5,200 crore for the FSI and the latter an approximate 22-acre land parcel in Mumbai's Worli neighborhood.

Bombay Dyeing stated in a statement that the acquisition is pending shareholder approval. "BDMC (Bombay Dyeing and Manufacturing Company) will receive about INR 4,675 crore from the buyer for Phase-I, subject to shareholder approval. Following the fulfillment of a few requirements by BDMC and the execution and consummation of the definitive agreements thereon for Phase-II, the remaining sum of about INR 525 crore would be paid out," the firm said in a statement.