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HUL leases former headquarters to HDFC

Live Mint

April 16, 2012

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After a near three-year wait, Hindustan Unilever Ltd (HUL) has leased out its former headquarters in south Mumbai's Churchgate area to Housing Development Finance Corp. Ltd (HDFC) for an undisclosed sum. Lease rental rates in the area for properties such as HUL's are at Rs. 200-220 a sq. ft, property consultants said.

A spokesman for HDFC said the mortgage lender and its group companies will occupy the 150,000 sq. ft. building. The lease, which he said was in the form of a "leave and licence" deal, is for three years.

"Some of the group companies such as HDFC Ergo General Insurance Co. Ltd are growing substantially and additional space is required for them," the spokesman said, without giving more details.

HUL didn't immediately reply to queries sent by email and text messages on Monday.

The consumer goods company put up its Churchgate property for sale in early 2010, and then for lease, after it moved its operations to a 12.6-acre campus in Andheri, a Mumbai suburb.

"In the initial days, HUL was asking for Rs. 300 a sq. ft but then the property has been in the market for a while and they wanted to finish the transaction," said another property consultant who didn't want to be named.

Earlier in April, HUL sold leasehold rights to a property called Gulita in Mumbai's upscale Worli area to Piramal Realty Ltd, the real estate arm of the Ajay Piramal group, for Rs. 452.5 crore. In 2010, HUL sold some small properties including residential apartments.

For India's real estate sector, 2012 has begun on a sluggish note, with only 4.1 million sq. ft of prime office space sold across key markets between January and March, as per the findings of CB Richard Ellis South Asia Pvt. Ltd in its April report—India Office Market View, Q1, 2012.

This is significantly lower than the 6.5 million sq. ft of prime office space sold in key markets between October and December and the 6 million sq. ft of space sold in the first three months of 2011.

As more businesses opt to set up offices at the Bandra Kurla Complex (BKC) in central Mumbai over south Mumbai's central business district Nariman Point, rental values have compressed marginally in the latter and increased in BKC. Nariman Point and Churchgate are prime office areas in south Mumbai.

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