Dream Bourse Project now Awaiting Takers

The online auction held by the Bharat Diamond Bourse from April 11 to 14, 2012, offering nearly 82 of its offices in the Bandra-Kurla Complex on “leave and license basis” is reported to have evoked poor response.

Participation Limited to Trade Members: Participation in this auction was offered only to trade-members. Those who were not trade members already but wanted to participate in the auction were, however, permitted to apply for trade membership by April 2, 2012.

Prescribed Procedure: Applications for participation in the auction were required to be filed online from March 12, 2012 to April 5, 2012, along with the requisite demand draft/cheque/direct deposit. The base-price of these offices being auctioned ranged from Rs. 300 to 400 per ft2.

Dwindling Demand: The aggregate space of these 82 offices was of the order of 58,018 ft2. However, participants in the auction are understood to have shown interest for just about 4000 ft2.

The ‘leave and license’ format of the auction itself meant it would attract smaller companies, and as such the space being offered in the auction was beyond their needs. Also, as the cost needs to be included in the business cost, the smaller companies would be affected. The low response at the auction was somewhat expected, say some sources.

Waning Attraction: Explaining the possible reasons for such poor response to the auction of these earlier coveted offices, some well-informed sources explained that earlier attractions for offices in the BDB complex have considerably waned. Consequently buyers, mostly, do not prefer to go there now. Small traders and brokers too are not eager to go there. It may be mentioned here that while it takes 3-4 hours to reach Mumbai from Surat, that much time is needed locally for reaching Bandra-Kurla Complex and coming back.

Snail’s Pace Shifting: That the urge to shift offices from the traditional Opera House area to the new location is at a low ebb is apparent from the fact that while BDB has allocated offices to nearly 2400 of its members, only some 47 firms (just around 1.95 per cent of the allottees) have actually shifted business to BDB complex so far.

Initial Effervescence: Observers recall that when the plans to set up the Bharat Diamond Bourse Complex at Bandra were unfolded in 1992, there was rush of eager traders to become members thereof as the BDB complex was projected to be ready by 1996 and prices at which offices were to be made available there looked attractively reasonable. However, actual implementation of the BDB project dragged on and on, finally taking nearly 18 long years for completion. Even when the over-due complex was formally inaugurated in October 2010, not a single diamond office was in operation there! In almost the ensuing year and half since then only around 47 diamond offices appear to have shifted to the new location. Forget the bee-line of traders envisaged initially!

Rosy Expectations: Eighteen years ago, it was generally believed that soon on completion of the mega BDB project, there would be a rush from the Opera House area to the new location, and office-prices there would therefore jump. This even led to some speculative activity in that area. However, even after the inauguration of BDB complex, any significant shifting to the new location has not been witnessed.

Cost of Office-space: This has considerably impacted the psychology of office buyers. This can be seen from the fact that while office space in the Prasad Chambers (Opera House) is now commanding higher prices of about Rs. 50000-65000 per ft2. offices in the BDB complex may be available around Rs. 40000-50000 per ft2. Also, one transaction in the Sheejee Chambers (Opera House area) is said to have been concluded around Rs. 1,10,000 per ft2. This may indicate that the office-buyers’ confidence in the Opera House area has been restored.

Meanwhile, one new irksome development seems to be manifesting itself as a back-drop. Probably, in order to expedite the pace of shifting, the diamond offices from the Opera House area to the BDB Complex, the facility of customs clearance was shifted from the Lamington Road area to the BDB Complex even before the shifting of diamond offices to the new location could reach some significant level. Since then, some trade circles that do not want to shift to the new location are understood to have started a move to form their new association. This is expected to seek a special customs clearance facility for the Opera House area. They argue that much time of diamond firms located in the Opera House area is wasted in taking the parcels to the BDB Complex and bringing them back, when it would be prudent to expedite export shipments by curtailing such procedural delays. Besides, a number of firms dealing in colored gemstones and pearls can take advantage of this facility. It is contended that the authorities concerned have been rather hasty in shifting the customs office from the Lamington Road area to the BDB complex, even before the diamond firms were shifted there.

At present there are 100+ offices functional at BDB , with 15 offices being inaugurated on the auspicious Akshay Tritya day itself. The expectation is that by coming Diwali, a lot many of the offices will be functioning at the BDB.