Kumar Mangalam Birla, chairman of Aditya Birla group, has carved out the real estate business of Century Textiles to make a foray into Mumbai’s lucrative commercial property market.
Birla Estates will redevelop its properties in and around Mumbai. Birla estates have spent nearly 2500 crores in building projects that include Birla Aurora in Prabhadevi.
Carving out the real estate business is one of the first steps taken by Birla after taking over the company’s reigns from his grandfather, B K Birla. In the quarter ended December, Birla also increased his stake in the company to 50 per cent from 45 per cent by subscribing to the company’s preferential share issue.
With the realty plans, Birla will be one of the last players from the old generation of business houses to enter the sector. Earlier, the Wadias of Bombay Dyeing, Tatas, Godrejs and Piramals made successful entries into the sector by redeveloping old textile mills and plant properties into commercial and high-end residential complexes.
Real-estate analysts said getting into commercial properties makes senses as lease volumes are up 10 per cent on a year-on-year basis in calendar year 2015. Rentals are firming up and vacancy levels have dropped to 8-14 per cent from 20-30 per cent highs in 2008. This trend may sustain, and commercial market is expected to outperform the residential market over the next 1-2 years.
Century Textiles shares have lost over 20 per cent value since January 1 and closed at Rs 479 a share on Thursday.