India's largest FMCG company expects a rent of Rs 200-250 a sq ft or a capital value of Rs 300 crore (Rs 3 billion) from the prime Mumbai property.
Hindustan Unilever Ltd (HUL), India's largest fast moving consumer goods company, has hit the market again to monetise its former headquarters in the Churchgate area in Mumbai.
Although it started the process of renting or selling the 153,000-sq ft HUL House almost two years ago, it could not conclude any deal due to valuation issues.
It was offering the ground-plus-seven-floor property on leave and licence or lease on a 'warm shell' basis (which means the property has minimal interiors done) for five to nine years, said a newspaper advertisement from the company.
HUL said the lessee had an option to buy the property after the first three years. "The idea is to give an option to corporates and investors who want to take it on rent first and buy it later," said a property consultant.
According to sources in the market, HUL is expecting a rent of Rs 200-250 a sq ft or a capital value of Rs 300 crore.
A clutch of banking firms such as Royal Bank of Scotland and Development Bank of Singapore had shown interest in leasing the premises and others such as State Bank of India and Bank of Baroda were in talks with HUL to buy the property, but talks did not go ahead, said the property consultant.
"There was a huge mismatch between the valuation expected
Replying to a questionnaire on delay in selling the property, a HUL spokesperson said: "As a policy, we do not comment on market speculation. We have no comment to offer for your queries."
However, upcoming supply in the city and its suburbs could pose a challenge to property owners such as HUL.
"HUL House is a Grade A office building in the central business district (CBD) and continues to interest corporates. However, seven million sq ft of office space by the fourth quarter of 2012 (calendar year) and additional seven million sq ft by 2015 in Parel, Lower Parel, Worli, BKC, Kalina and Kurla, etc, continue to pull demand away from CBD, as corporates want to be closer to employees and at lower cost," said Sanjay Dutt, chief executive, Jones Lang LaSalle, an international property consultancy firm.
HUL is also in the process of selling its sea-facing 'Gulita' property in Worli. Initially, it had planned to lease out the property.
But after the Supreme Court set aside the Brihanmumbai Municipal Corporation's decision to charge a 50 per cent premium on transfer of ownership of the property, it decided to go for an outright sale.
It has shortlisted entities led by billionaire industrialists Anil Ambani, Ajay Piramal and Gautam Adani, and realty developers Peninsula Land and Oberoi Realty to sell the land. It is talking to the candidates on the sale.
