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SBI, DGS to rent space in Air India Building

Last Updated: Sunday, January 27, 2013 - 18:58

Mumbai: National carrier Air India has finalised a deal with the country's largest lender State Bank of India to lease out four floors at its iconic headquarters at Nariman Point here, giving fillip to the airline's asset monetisation programme, sources said.

Besides, shipping regulator Directorate General of Shipping, is mulling to move some of its offices to the same building and has approached the Shipping Ministry on this issue.

"SBI has decided to lease from us four floors or 54,000 square feet at the rate of Rs 350 a square feet per month at Air India building in response to our tender," airline sources told PTI.

The realisation is much higher than the Rs 200-250 per square feet estimated by analysts, who expect the rentals in the Nariman Point area to fall as business activity in the city shifts to pockets like the suburban Bandra Kurla Complex.

Incidentally, SBI's headquarter is located in the Nariman Point area itself.

The shipping regulator Directorate General of Shipping (DGS) has also evinced interest in renting three floors or 40,500 square feet of space at the same rental as SBI, sources said.

The interest shown by the two entities has bolstered Air India's confidence and the carrier is already mulling, making an additional 35,000 square feet of space available for bidding in the same building.

"We had tendered for 1,60,000 square feet and have got interest for 94,000 square feet. We will now come with a re-tender for 1 lakh square feet which will include the amount of area yet to be bid from the first tender and an additional 35,000 square feet," sources said.
The consultant for the airliner DTZ International Property Advisors is working on the fresh bids, they said.

According to reports, the national carrier is targeting to raise Rs 500 crore in FY13 and Rs 5,000 crore in the next 10 years by monetising some of its 105 properties.

Air India had a debt of Rs 43,777 crore as of December and the last five years have seen losses accumulating to over Rs 27,000 crore.

The government had last April announced Rs 30,000 crore bail out package, including Rs 6,750 crore by way of equity infusion and assured equity support for Rs 23,481 crore until 2020-21.

The 23-storey Air India building, located by the Arabian Sea, was built in 1974 and currently serves as the corporate headquarters of the national carrier. It has a total of 3 lakh square feet of area which can be used and an additional 2 lakh square feet of open space and utilitarian area. It has tenants like Tata Consultancy Services.

According to sources, 40,000 sq feet of the 2,00,000 sq feet unusable area is a terrace and couple of entities have already approached Air India management to develop it into an exclusive club or space for open-air parties.

All the entities would be paying the same amount as Air India or DGS, sources added.


First Published: Sunday, January 27, 2013 - 18:58
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