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In the latest CIDCO auction, a plot on Navi Mumbai's coveted Palm Beach Road broke records with a staggering bid of Rs.6.46 lakh per sqm, highlighting the intense demand for prime land. The plot is located at plot number 23 in sector 4 right at the entrance of Nerul from Palm Beach road. The residential cum commercial plot is of 2,459.33 sqm with an FSI of 1.5.
The plot is in fact the same that had fetched a record Rs.6.72 per lakh sqm rate in the auction in March this year. The highest bidder Aramus Heaven LLP, was to pay Rs.165.50 cr lease premium to CIDCO for the plot apart from 18% GST. The company however reportedly withdrew later, leading to the plot being offered again now by CIDCO.
This time Falcon Electro-Teek Private Limited bid the highest among 4 bidders at Rs.6,46,803 per sqm for the plot which will cost Rs.159.07 cr plus 18% GST. The second highest bid was Rs.6,26,000 per sqm. Though the bid this time is less than last time, it is still around Rs.1 lakh per sqm higher than the previous highest record of Rs.5.54 lakh per sqm in the auction held in November 2022 for another Palm Beach road plot located in sector 20 of Sanpada. In fact, all the bids this time are of over Rs.6 lakh per sqm.
Realising that the Palm Beach road plots are much in demand due to lack of availability of land in the area leading to the record bid last time being 6.5 times more than the base price of the plot, CIDCO this time increased the base price to a whopping Rs.5,18,328 per sqm.
Vasant Bhadra, President of Builders Association of Navi Mumbai (BANM), explains that the high rates stem from the location's demand, especially for flats ranging from 3 BHK to 6 BHK. Developers form alliances to bid collectively, aiming to reduce costs, particularly when they intend to acquire flats in the constructed building. The competitive atmosphere, coupled with limited plot availability on Palm Beach Road, has made the bids in the region go beyond limits.
Despite the success of this auction, an unexpected twist emerges as 18 out of 36 plots, including bungalow plots, have received no bids. Industry insiders attribute this to CIDCO's elevated base prices and existing market conditions. The lack of interest in locations like Vashi and Kharghar, along with bungalow plots, raises concerns. CIDCO's decision to substantially increase base prices is criticised for deterring potential buyers and creating an unfavourable market scenario.
Haresh Chheda, Former President of BANM, highlights the intense competition among developers, leading to unrealistic bids driven by CIDCO's heightened base prices. He suggests that CIDCO's approach fuels this race and requires reconsideration. Manohar Shroff, Senior Vice President of CREDAI-MCHI, Navi Mumbai, cautions against such bidding dynamics. He noted that the previous bidders were a group of developers who had come together to ensure the highest bid and distribute the cost. They even took bookings but later returned the plot as it was not feasible. Shroff says that this tendency is not good for the market in Navi Mumbai as the price in these cases are almost the same as that quoted in a place like Juhu, close to the Bachchan bungalow.
CIDCO has earned a whopping Rs.1,170.80 cr from the sale of 18 plots in the auction. However, the unexpected lack of bids for 18 plots raises concerns about CIDCO's pricing strategy and market saturation. The prevailing market conditions, influenced by increased FSI and supply due to government incentives, suggest a need for recalibration in CIDCO's base prices. B. N. Kumar, Convenor of Alert Citizens Team, emphasises the need for a tender process with reasonable rates, considering the current scenario and the influx of premium flats through redevelopment.
To summarise, while Palm Beach Road continues to witness unprecedented demand and record-breaking bids, the lack of interest in other plots necessitates a reconsideration of CIDCO's pricing strategies. The market dynamics, competition among developers, and the surge in supply necessitate a balance to ensure sustained growth without discouraging potential buyers.
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