Indiabulls Real Estate Ltd will sell a London property to the group’s billionaire founder Sameer Gehlaut, as it looks to pare debt.
The real estate arm of Indiabulls Group said in a stock-exchange filing it will sell Century Ltd, which houses Hanover Square Property in London, for £200 million ($259 million, or Rs 1,809 crore), to its promoter.
Indiabulls said it had bought the property in 2014 for £161.5 million.
The company will use the funds to reduce its debt to about Rs 3,000 crore from Rs 4,590 crore at the end of March. Indiabulls also said it will now focus only on Mumbai and Delhi-NCR markets.
Shares of Indiabulls Real Estate jumped on the announcement. Shares of the company jumped as much as 13.4% on the BSE on Wednesday, before paring the gains to end 10.2% higher at Rs 116.35 apiece. The benchmark Sensex gained 1.3%.
The decision to sell the property comes in the wake of a sluggish property market in London and Britain’s exit from the European Union. “In light of continuing Brexit-related issues and uncertainty around it, the London property market remains sluggish,” Indiabulls said, referring to the UK’s 2016 decision to exit the EU.
Indiabulls and a few other Indian developers such as Lodha Developers and Sobha Ltd had entered the London real estate market between 2013 and 2015. While Lodha launched one project, Indiabulls did not move ahead on its plan to build a luxury project on the site. However, their plans ran into rough weather after Brexit.
Meanwhile, the company reported net sales of Rs 5,222 crore for the financial year 2018-19 and a net profit of Rs 504 crore. It delivered 9.7 million square feet of space during the financial year and collected proceeds of Rs 2,607 crore.
Indiabulls has a completed and under-construction residential portfolio of over 40 million sq ft and completely owned commercial portfolio of 2.4 million sq ft.
Last year, it struck a joint venture with Blackstone, one of the biggest owners of commercial real estate in the country, for a rental platform. The platform owns and operates around 7 million sq ft of commercial and residential properties which are at different stages of the development cycle.
Should you sell your house at auction?
Any auctioneer will be happy to discuss the pros and cons of selling your house at auction. The auctioneer will take your particular circumstances into consideration.
In fact, to get legal for a moment, auctioneers (and estate agents) are both bound by a ‘Duty of Care’. As a potential vendor, they are obliged to advise you on the best method of selling your property, taking into account the circumstances under which you are selling. This should be part of your discussion with the auctioneer when your property is appraised by the auction house. Other methods of sale the auctioneer might advise are via estate agents (‘By Private Treaty’) or by tender.
How property auctions actually work
The mechanics of selling your house at auction are actually very simple:
• you pay entry fees and sale fees
• you set the minimum price (reserve price)
• bids are made in an open, competitive environment so the sale price achieved is public knowledge but.
• you can’t choose the buyer
• the highest bid wins as long as it meets or exceeds the reserve
• bidders can make as many bids as they want to
• your prepare the legal pack with your solicitor
• the contract to buy and sell is made as soon as the gavel falls
• the whole process takes a maximum of 28 days – ideal if you want a quick sale
On the money side of things, fees are generally of two kinds: entry fees and sale fees. Entry fees are non-refundable. As a rule of thumb, they cover the advertising of the sale. These can run to several thousand for the top London auction houses. The sale fee is a commission based charge and is typically between 1.5% and 3.0% of the final selling price.
It is not necessarily in your interest to choose the auctioneer with the lowest fees. You should be asking yourself is the auction house “fit for purpose”? Another consideration might be the way the auction house sets reserve and guide prices. This is one aspect of selling houses at auction that is not as simple as it should be.
Tip: You’ll get the best price for your property at auction, selling either at an established local auction or a big London auction. These will attract the highest offers. All things being equal avoid selling in July and August at auction if you can.
