Citibank India set to seal Rs 1,000cr office deal in Mumbai

MUMBAI: The city may soon record the largest transaction for commercial space with Citibank India close to paying approximately Rs 1,000 crore for space in an under-construction building at Bandra-Kurla Complex. The deal, expected to be concluded shortly, comes at a time when the property market is in the dumps.

Market sources said the bank is believed to be paying Rs 33,000 a square foot for the 3 lakh sq ft office space in the new building. It is being constructed by Purnendu Chatterjee promoted-TCG Urban Infrastructure and New York-based realty firm Vornado Realty Trust. A Citi spokesperson declined to comment on the deal.

"This could be the largest commercial deal. BKC is a premium location, but the price is high considering the depressed market conditions," said real estate consultant Ashok Narang. A source familiar with the transaction said the bank signed a letter of intent (LoI) and was in the process of ironing out issues such as naming rights of the building, car parking and interior fittings. The deal is brokered by global property consultants, CBRE.

The building is coming up on a two-acre plot which was bought by TCG-Hiranandani Group for Rs 1,041 crore in November 2007. The under-construction building will have a total area of over 6.5 lakh sq ft, of which the bank will own half.

The biggest commercial property deals in the city so far would include the one in May 2010 where Bombay Dyeing sold a 4 lakh sq ft building in Worli to Axis Bank for Rs 782 crore. In end 2008, Standard Chartered Bank paid Rs 750 crore for approximately 1.47 lakh sq ft spread over 4.5 floors in Crescenzo building at BKC. In 2009, developers Rustomjee sold a 1.42 lakh sq ft office space at Andheri East to SBI Life Insurance Company for Rs 211 crore. In early 2007, the British deputy high commission inked a Rs 147-crore deal to purchase outright three floors in a building constructed by Shri Naman Developers at BKC. The commission paid Rs 35,000 a sq ft for space measuring a built-up area of 42,000 sq ft.

Citibank's office expansion comes at a time when it has made a phenomenal turnaround. Three years ago, Citigroup was on the verge of collapse, but its India operations continued to be robust. The bank has a strong presence at BKC with its headquarters, the eight-storey Citibank Centre. In late nineties, Citibank moved its main offices from Nariman Point to BKC. It took on lease another 50,000 sq ft in Trent building.

During the global financial meltdown of 2008, Mumbai's property market was agog with rumours that the Citibank building in BKC would be up for sale, a move the bank denied. That year, Citigroup sold off several of its properties worldwide when it was hit by the subprime crisis. The properties included Citigroup Center in the Shinagawa district of Tokyo, which it sold to its rival Morgan Stanley in a deal reportedly worth $445 million. The bank shed apartments across India in 2007-08. In Mumbai, it sold more than half a dozen flats at Altamount Road, Bandra and Colaba. The bank said sale was due to the increasing preference of employees towards a flexible remuneration policy.