Four hotel chains have participated in the bidding process for a plot designated to construct a five-star hotel in Navi Mumbai. This activity occurs amidst a period when land prices in Mumbai and its surrounding areas have been on a downward trend.
Among the bidding entities are Indian Hotels Co. Ltd, which owns the renowned Taj group of hotels, Sun-n-Sand Group of Hotels, Leela Palaces, Hotels and Resorts, and Metropolis Hotel. They have submitted their technical bids for an auction centered on a 11.6-acre plot situated on Palm Beach Road. Provided that their technical bids qualify, each of these bidders will subsequently submit their financial proposals by this Friday.
Cidco (City and Industrial Development Corp. of Maharashtra Ltd), which is overseeing this auction, had previously set a minimum price of Rs37,000 per square meter for this particular plot. This pricing is almost half of what two similar plots fetched in an auction conducted by the same organization in Navi Mumbai during 2007.
The economic slowdown has significantly affected land auctions this year. Just last week, Cidco managed to secure only one bid in an auction for a plot reserved for an IT park. The land eventually sold at Rs1 lakh per sq. m, considerably less than the Rs1.5 lakh fetched for a plot in the same area back in 2006.
Pranay Vakil, the chairman of the real estate agency Knight Frank India Pvt. Ltd, expressed his opinion that conducting a property auction during a declining market is 'not a good idea'. He elaborated, "We are not encouraging auctions now, because the psychology is not to outbid people but to underbid". Vakil further pointed out that land prices in both Mumbai and Navi Mumbai have decreased by 15-30% this year. Indications of a corrective phase in the real estate market in Mumbai initially became apparent when two out of five plots went unsold in the central business district of Bandra-Kurla Complex during an auction held in March.
G.S. Gill, the managing director of Cidco, emphasized, "We are not private developers or landowners who are waiting for the market to go up. We continue to develop and sell land".