Indiabulls Real Estate Ltd will sell a London property to the group’s billionaire, Sameer Gehlaut, as it looks to pare debt. The real estate arm of Indiabulls Group said in a stock-exchange filing it would 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 after 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, entered the London real estate market between 2013 and 2015. While Lodha launched one project, Indiabulls did not move ahead 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 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 a completely owned commercial portfolio of 2.4 million sq ft. Last year, it struck a joint venture with Blackstone, one of the country’s biggest commercial real estate owners, for a rental platform. The platform owns and operates around 7 million sq ft of commercial and residential properties 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 consider your particular circumstances. To get legal for a moment, auctioneers (and estate agents) are bound by a ‘Duty of Care. As a potential vendor, they must advise you on the best method of selling property, considering the circumstances under which you are dealing. This should be part of your discussion with the auctioneer when the auction house appraises your property. Other methods of sale the auctioneer might advise are via estate agents (‘By Private Treaty) or by tender.
How property auctions work
The mechanics of selling your house at auction are elementary:
• 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.
• 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
• 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, fees are generally of two kinds: entry 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 typically between 1.5% and 3.0% of the final selling price.
Choosing the auctioneer with the lowest fees is not necessarily in your interest. You should ask yourself, is the auction house “fit for purpose”? Another consideration might be how the auction house sets reserves and guides prices. This aspect of selling homes at auction 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.