The US government has hired property consultancy Knight Frank to carry out a valuation and strategic review of all its real estate properties in India, valued at thousands of crores, as a possible precursor to the sale of some assets.
The properties, which house embassies, consulates, offices, residences, schools and libraries at prime locations across Delhi, Mumbai, Hyderabad, Chennai and Kolkata, were acquired over the years at low rates prevailing during those days. But their market value has skyrocketed due to the real estate boom of the past half-a-decade.
“The strategic review and valuation is being done to understand the best use of all properties, including selling some of them,” said a person familiar with the development. The US embassy did not respond to an emailed query. A Knight Frank spokesman said the firm did not comment on market speculation.
A couple of months ago, it was reported the US had sold Washington House, its residential building on Altamount Road in south Mumbai, to Lodha Group for Rs 375 crore. Lincoln House, which used to house the US Consulate General till last year, is also on the block, though legal issues are believed to have held up the sale of this property at Breach Candy, valued at over Rs 1,000 crore.
The US embassy has also in the past tried to sell a two-acre bungalow on Tilak Marg in New Delhi’s Lutyens Bungalow Zone to a private developer, but the foreign ministry refused to allow the sale as it felt the transaction price was much below market value of the property.
Sources in the real estate industry peg the current value of the bungalow on Tilak Marg in New Delhi at Rs 250-300 crore and say the US embassy is still interested in disposing of this property.
“Many foreign governments get reviews done intermittently. While a level-1 analysis is for compliance and regulatory reporting purposes, a level-2 analysis, which includes both a strategic review and valuation, could include sale of some assets,” says Anckur Srivasttava, chairman of Gen-Real Property Advisors, who has worked on property deals with some foreign governments.
The US government owns several properties in Delhi, Mumbai, Hyderabad, Chennai and Kolkata, including commercial office buildings, schools as well as residential properties.
In addition to the heavily guarded embassy building in the diplomatic area, landmark properties in Delhi include the American Centre on Kasturba Gandhi Marg, the twoacre bungalow on Tilak Marg, the American School and a few apartments spread across south Delhi.
In Kolkata, the American Centre is located close to the posh Esplanade area while the consulate is on Ho Chi Minh Sarani in the city centre. In Chennai, the US government has a commercial property on the prime Anna Salai. In the past few years, some other governments have also sold properties owned by them in the country. In 2006, the Dutch Embassy sold a bungalow on Amrita Shergill Marg in Lutyens Bungalow Zone for Rs 137 crore to Sanjay Singhal, the chairman of Bhushan Steel.
Some other embassies are also in the process of selling assets in central districts to either consolidate holdings or expand at new locations, such as the upcoming diplomatic enclave near the Delhi airport. The Reserve Bank of India, which regulates repatriation of money by foreign entities, said embassies are allowed to engage in sale and purchase of assets in India.
“In terms of Regulation 5A of FEMA 21, foreign embassies, diplomats and consulate generals have general permission for sale and purchase of immovable property other than agricultural land and plantations in India subject to necessary clearances from the ministry of external affairs, and provided that the consideration is paid out of funds remitted from abroad through normal banking channels,” said Alpana Killawala, a spokeswoman for the Reserve Bank of India She, however, did not clarify if foreign governments were allowed to repatriate profits made from such deals.
Source: Economic Times, New Delhi Edition