Air India gears up for property sale in 2 tranches

Air India is e-auctioning 41 apartments in Mumbai in the first phase of its property sale and 12 in others cities in the second phase. The properties to be sold in the second tranche include 35 residential flats and land banks.

Though the airline has kept a reserve price of Rs 315 crore for its Mumbai properties, it hopes to make around Rs 500 crore from the sale, and looks to make a similar amount from the sale of properties in other cities, according to sources.

According to sources, the company owns properties in cities such as Jodhpur, Jaipur, Varanasi, Patna, Nagpur and Aurangabad, and plans to take them to the market in the next few months.

"At present, they are in the process of making documentations and seeking approvals from governments. In many places, they got the land for residential accommodation, ticketing offices and so on. So they have to take permission from various state governments," the source said.

Air India sold a property in Coimbatore for about Rs 100 crore in the last one year, the source said.

The carrier has a vast bank of immovable properties, accumulated over a period of time at various locations in India and abroad. Some of the properties are lying unused for a long time. Besides these, there are some locations where the airline has stopped functioning. The idea is to monetise those assets to see how much they can reduce the company’s debt.

The Air India executive also said State Bank of India had expressed an interest in buying six or seven flats in Sterling Apartments in South Mumbai. "Last time, they bought five or six flats in Sterling Apartments. The SBI wants to buy more,” the official said.

According to the source, the Prime Minister’s Office (PMO) is monitoring the sale of Air India’s properties in various cities, nearly two months after the Cabinet approved divestment in the state-owned carrier.

“Air India is not behaving like a typical government-owned company in this case. There is improved vigour and interest from them. The PMO intervention is visible, as we get mails on Sunday also,” said the source.

Air India has simultaneously expedited the process of leasing vacant spaces in its iconic building at Nariman Point. "Recently, we leased out a floor to Bank of Baroda. Total lease revenue from the Nariman Point building is around Rs 100 crore now," the official said.

Air India's auction comes at a time when new residential launches have been on a decline. There was a 17 per cent decline in the number of new launches since the second half of 2016, with 40,600 new units being introduced in the first half of 2017 in prime cities. Mumbai and Bengaluru were at the forefront with 35 per cent and 33 per cent of launches, respectively, according to Colliers International.

Launches would be down 25-30 per cent in Mumbai in the second half of 2018 on a yearly basis and 10-15 per cent down in the National Capital Region and Bengaluru, it added.

The airline had said recently that it got good response from prospective buyers for its property sale advertisements. “Some government departments want to buy the apartments directly,” a source had said.