As per new reports, Air India is on course to sell its moderately valued land near Nerul in Navi Mumbai. Reportedly, this 1,00,000 square metre property deal is expected to earn Air India Rs 1,500 crore. This move is a bid to join the growing privatization movement within government-owned entities. However, the acquisition may lead to some delays given that some retired Air India employees are residing in the said area.
The City and Industrial Development Corporation of Maharashtra is said to be assisting Air India to get a decent deal for the land. The proposal recommends using 10 per cent of the land for commercial use while the rest will be used for residential purposes.
It is said that the land at Nerul currently has around 500 Air India employees and their families living at a residential complex. These flats were allotted to the retired employees by Air India, so the company will need to provide a suitable replacement or provide alternative housing nearby before the deal goes ahead.
Rahul Grover, CEO of Mumbai-based Sai Estate Consultants, said “We are sceptical of figures they are expecting. The land rates in Nerul should be less than Rs 5,000 per sq.ft, which makes the Rs 1,500 crore target unlikely. A more conservative figure should be expected given that the real estate sector is already reeling with excess inventory.”
“Moreover, developers are facing a liquidity crisis and the resulting lack of risk appetite will see limited demand for offerings. It would be advisable to sell the land in phases over the next few years so better prices can be obtained by the struggling Air India as demand picks up,” he added.
Air India has been struggling to keep up with its mounting losses over the past few years. Back in 2011-12, the government of India tasked the airline to sell off at least INR 500 crore worth of property each year as a counter measure. In 2018, the airline put up 111 properties valued at INR 9,500 crore. Air India also put up its iconic Mumbai property up for sale at Rs 240.11 crore last year.
However, any attempts at selling off property have been futile as Air India failed to attract bidders even at base prices of the properties.
Last year, the government put up Air India for sale while offering additional relaxations such as a 100% stake in the company as well as allowing the new owner to offer voluntary retirement to its staff.
While the airline continues to operate under the government’s umbrella, experts believe that attracting bidders may be hard given the quantum of the debts the new owner has to take over. Others recommend a more measured approach by selling off the airline in parts.
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