Stanchart Pays Rs 720 Crore in Bombastic BKC Deal

In a deal that seems to be one-off, albeit bright spark, in an industry gasping for cash, Standard Chartered paid Rs 720 crore for 2.2 lakh sq ft in an under-construction building called Crescendo. The sellers were Parinee Developers.

The rate works out to Rs 32,000 per sq ft, which is between 30-40 percent lower than the Rs 45,000 shelled out in 2007 by Wadhwa Builders.

The deal is being shouted down a one-off by brokers, many of whom say that Standard Chartered paid more than it should have. A Stanchart spokesperson said they were planning to set up their corporate headquarters at the new premises which will also have the wholesale and retail banking operations.

Commercial lease in suburban Mumbai is also slumping. Grade-A properties are now leasing at Rs 325 per sq ft as opposed to Rs 400-450 a few months ago. Office space has also fallen to Rs 300-350 as compared to a few months ago. However, even at these rates, there are no lessees available, said industry sources.

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Citibank Puts Indian HQ on Sale, Stanchart to Follow

The tarpaulin has collapsed over their heads in the US, that they are now trying to sell their offices in Mumbai and send money back home.

Foreign banks have put their offices on the Mumbai real estate market as a serious downturn awaits the home mortgage business in the US. The option-ARMs (home loans that start with very low or zero EMIs and then reset to very high rates after a few years) are set to revert in December 2008, thus accelerating the number of foreclosures, as home buyers, who were virtually lured in to ludicrous home purchases, find they are sitting on negative equity. This means the value of their property falls below their purchase price.

On sale is Citigroup Center, located in the Bandra-Kurla Complex in Mumbai. This 2 lakh sq ft tower is expected to fetch Rs 500-800 crore, if market sources are to be believed. This means the price per sq ft is Rs 25,000 to Rs 40,000 at the highest end. However, it is unlikely that even this price may be achieved. Citibank is loud-mouthed when it palms off homes at exorbitant prices to NRIs, like it made sure it splashed the news in all the papers, when it sold a flat in Nariman Point, Mumbai, for Rs 97,000 per sq ft, but when it sells its own property, it is rather tight-lipped, which is to be expected.

The 8-storey structure will however be leased back by Citibank. The bank has been on a selling spree for the last few months, in an attempt to shore up capital for its beleagured US headoffice. Citi's CEO Vikram Pandit has pledged to sell off over $400 billion in assets over the next few years. Citi has also sold property in Tokyo Japan for $445 million to rival JP Morgan, and has leased it back. Over 45 branches have been closed in the US.

Another bank that has put its Fort office on sale is Standard Chartered Bank which has a 40,000 sq ft office space in the Fort area of Mumbai.

It is amazing that at a time when a lot of foreign financial companies are taking billions of writedowns, Barclays Bank chose to pay a rent of Rs 1 crore per month for 15,000 sq ft of office space located in CeeJay House, in Worli, Mumbai.

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