Mumbai: The Indian Railways, which has a large land bank in Mumbai lying vacant, has decided to tap three prime land parcels, making way for commercial and residential development on the plots, aiming to raise over Rs 8,000 crore.
The Rail Land Development Authority (RLDA), a railways’ arm established to generate revenue by developing vacant railway land in the country, plans to open up three plots at prime areas in Mahalaxmi, Bandra East, and Parel for development on a 99-year-old lease.
An RLDA official, who did not wish to be named, said, “We are tapping our Mumbai land with a new financial model this time. The market has always had an interest in land in Mumbai. Our USP is the location of our plots.”
“Most land that the railway owns in the city is in prime areas; it is close to railway lines and stations. So, we are expecting a good response,” the official added.
For the first time, the RLDA has invited bids based on a revenue-share model, where the developer must pay a percentage of its revenue to the RLDA towards the lease premium, according to a schedule, instead of paying the lease premium upfront.
For the Bandra East plot, the RLDA has floated a bid under which the developer must pay at least 45 percent of its revenue share to the authority. The revenue share for the Parel plot will be at least 30 percent. For the Mahalaxmi plot, the revenue share will be a minimum of 35 percent.
According to the RLDA officials, the railways will provide the land, but the construction, as well as all required approvals and clearances, will be the developers’ responsibility.
Together, across the three locations, the RLDA has invited bids to develop nearly 19.5 acres, with a permissible Floor Space Index (FSI) of four on the Bandra East plot, and 4.05 on the other two plots. The FSI is the ratio of the built-up area to the total plot size.
Rail land development
The largest of the three plots that the RLDA plans to auction is in Bandra East, measuring 11.2 acres. The railway hopes to generate at least Rs 5,365 crore from the land.
The plot is 500 metres from the Bandra suburban railway station and close to the Bandra Kurla Complex (BKC) business district. The RLDA has proposed that this plot be used for commercial development, considering its proximity to BKC. It is also said to be free of any encumbrances and has negligible vegetation.
The land at Parel spans approximately 5.7 acres, and the RLDA has set its reserve price at Rs 1,734 crore. This land is a small fraction of a much larger parcel that the railway owns at the Parel Supari Baug Colony.
At the Parel colony, the RLDA has floated a bid for residential development. The plot it holds there is a mere 36 metres from the arterial Dr B.R. Ambedkar Road, and close to several residential pockets in the island city.
The plot at Mahalaxmi, measuring 2.6 acres, is adjacent to the railway line close to the Mahalaxmi suburban railway station and the Science Centre Metro station. There, the RLDA floated a bid for a mixed residential and commercial development.
The RLDA will hold a pre-bid meeting for the Mahalaxmi land Tuesday and for the other two land plots on 23 September.
(Edited by Madhurita Goswami)