Air India Ltd expects to sell its former head office in Mumbai for an estimated ₹ 2,000 crore by the end of March to state-run Jawaharlal Nehru Port Trust (JNPT), said a senior airline official. Both JNPT and Air India are carrying out their individual valuations of the iconic Air India building at Mumbai’s Nariman Point, the Air India official, who declined to be named, told Mint. “The proceeds from the sale of the building will be used to pay off a part of the airline’s debt,” said the official.
Officials at JNPT didn’t immediately respond to an email seeking comment.
A potential deal for the 23-storey building at ₹ 2,000 crore will be a boost to financially-troubled Air India as it will surpass realisations expected previously.
Air India has a net debt of ₹ 55,000 crore, including ₹ 21,000-22,000 crore of aircraft debt.
The carrier has been incurring losses for more than a decade and also failed to garner investor interest in a recent privatisation attempt.
The building served as the corporate headquarters for Air India until 2013 when the head office was shifted to New Delhi.
The Air India building, which is spread over 220,000 sq. ft, has several vacant floors though several floors, overlooking the Arabian Sea have been rented out to the directorate general of shipping, State Bank of India, and Tata Consultancy Services Ltd.
In July, Mint cited property consultants as saying that Air India could garner about ₹ 700 crore from the deal, far below what the storied building could have fetched a decade earlier.
Nariman Point, once among the world’s costliest office locations, has lost its sheen as more companies shift to Mumbai’s Bandra Kurla Complex office hub.
“The buildings at Nariman Point are old and are not conducive to setting up modern offices with large floor plates and automation facilities,” real estate advisory firm Liases Foras’ managing director Pankaj Kapoor told Mint in July.
The Air India building, considering its complexity and limited redevelopment potential, could fetch the airline about ₹ 650-700 crore, Kapoor had said.
In contrast, Express Towers, located next to Air India building, and spread over 400,000 sq. ft, was sold for ₹ 870 crore in 2014.
Source: Mint