Japan’s Sumitomo group plans to build offices properties, mall and a hotel on the acquired from Bombay Dyeing, according to people who are aware of the company’s plans .
” They are bullish on office market in India. They could also build a mall and hotel to make it a integrated commercial property,” said a consultant who did not want to be quoted.
Sumitomo could have to spend about Rs 6000 crore in developing Bombay Dyeing land in Worli area of Mumbai, as per ballpark estimates by consultants.
This estimates are based on construction costs , interest cost at current rates and premiums to be paid.A mail sent to Sumitomo did not elicit any response .
On Wednesday, Bombay Dyeing said it would sell 22 acre of land in Mumbai to the Japanese company for Rs 5200 crore.
The company can develop upto 5 million square feet of properties in the plot of land given that it can get a floor space index of 5, said Vishal
Shrivastava, executive director at Anarock Capital, a real estate focused investment banking firm.
FSI means permissible construction on a given plot of land
The construction costs come around Rs 6,000 per sq ft, interest cost come about Rs 3,000 per square feet and premiums to be paid to thr government comes to about Rs 3,000 per sq ft , said another consultant who did not want to be quoted. Hence 5 million sq ft multiplied with Rs 12,000 per sq fr gives a figure of Rs 6,000 crore.
“The plot has intrinsic FSI. Depending on the scheme of development, there is a potential to take the overall FSI up to 5 under DCPR ( (Development
Control and Promotion Regulation). Enhanced FSI would become available upon loading of premium FSI and TDR (transferable developement rights),” Shrivastava said.
DCPR refers to the development plan for Mumbai . TDR has to be bought from other parties .
According to industry sources, Sumitomo normally funds land buying from its balance sheet and could go for debt in India for construction.
Sumitomo Realty & Development will invest 500 billion yen ($3.58 billion) in office building projects in India, Nikkei Asia reported earlier.
In 2019,Sumitomo bought a three-acre plot in the prime Bandre Kurla Complex for Rs 2,238 crore from Mumbai Metropolitan Regional Developement Authority. It
is building a office complex on the plot.
In 2018, Sumitomo signed a JV with Krishna group of NCR to set up real estate projects in the country . The JV is setting up residential projects in Gurugram called Krisumi City.