Air India to lease Nariman Point building's ground floor to eatery joints

Written by fe Bureau | Mumbai | Updated: Jun 18 2014, 01:13am hrs
Air India buildingIndustry experts said that rent for office space in Nariman Point stands at below Rs 300 per square feet. (Photo: PTI)
State-owned Air India has opened the door of its former headquarters, Nariman Point's iconic Air India building, to restaurants and eating joints, as a part of the debt-ridden airline's exercise to monetize its assets.

According to a tender issued by the airline, a copy of which can be found on its website, Air India is looking to lease 1000 square feet area to eatery joints for a three year period.

Leasing of area over 1000 square feet would also be considered subject to availability of space with Air India Ltd, the airline's tender document said.

Industry experts said that rent for office space in Nariman Point stands at below Rs 300 per square feet.

The office rentals in Nariman Point Area is about Rs 240-250 per square feet, said a recent report by CBRE South Asia Pvt Limited, a global real estate consultant.

However, the rentals for food and beverage outlets are atleast 20% higher from the office rents. So, the rentals for eateries at Nariman Point could be in the range of Rs 300 per square feet.

"Depending on the format whether Air India building's ground floor will be leashed for food court or fine dining restaurant, the price will further differ," said Ashutosh Limaye, Head Research & REIS, Jones Lang LaSalle India, a global real estate consultant.

The flag carrier, which is currently reeling from a debt burden of over Rs 44,000 crore, is required to generate Rs 5000 crore over a period of 10 years starting Fy 2013 under the turn around plan (TAP) that makes the airline eligible for periodic equity infusion from the government by selling and leasing some of its domestic and international properties.

The airline had earlier in 2013 leashed four floors in the building to State Bank of India, while a part of its ground floor was given out to Bharatiya Mahila Bank. Apart from the banks, Tata Sons-run Tata Communication Services (TCS) occupy the eleventh floor of the building that over looks Marine Drive.

A senior Air India official had earlier told FE that the airline was finding it increasingly difficult to monetize its domestic and international assets.

We are finding it difficult to find buyers who are willing to shell out the required price asked by the airline especially for our international assets and some selected domestic properties because of the current market situation, the official had said.