Cash-strapped developers in India’s commercial capital Mumbai are putting up prime properties including land parcels for sale to raise funds to complete their half built projects and service debt contracted during the boom period. Property consultants estimate that as much as around 30 million square feet of land could come onto the Mumbai market alone but what portion of this would find buyers remains to be seen.

Properties which are up for sale include DLF’s asset in Lower Parel worth over Rs 3,500 crore, Hindustan Unilever’s corporate Backbay Reclamation property and other corporate assets worth Rs 600 crore, US Consulates two buildings in south Mumbai valued above Rs 1,000 crore, a two-acre land parcel available in Malabar Hills and another building of 1.3 acre in Breach Candy in South Mumbai each costing over Rs 50,000 per square foot.

“We have been approached by a very large number of developers with land parcels for sale and we are evaluating all of them as we have the financial strength to do deals,” said Khushru Jijina, managing director at Piramal Realty.

Anshul Jain, chief executive officer, DTZ said, “Some properties might get sold but valuations are likely to get corrected depending on property to property. Developers are not going to get the price they are looking for in this market because the consumers are not buying and definitely demand has slowed down.”

Top officials at Godrej Properties, which has done a couple of acquisitions in the recent past too confirmed that several land parcels, were now coming to the market. “Getting a property in South Mumbai has always been difficult, but all of a sudden there are many land parcels available for sale. The total area coming up for sale only in South Mumbai could be over 30 million square feet,” said Joygopal Sanyal, national director at Jones Lang LaSalle.

Although the land parcels are up for sale, there are not many buyers who can afford to buy these prime properties, said officials at leading international property consultants. Already private equity players and other investors have burnt their fingers by investing in the sector and most of them haven’t got the returns they expected. “The business model of the sector has increasingly come under the scanner with even the leaders having a return on equity of under 10 per cent and the sentiment turning negative after the issue of notices by the Competition Commission of India,” said the India head of a leading US-based private equity fund. Banks too have curtailed lending to the sector and as a result finding a buyer for these high value properties is becoming increasingly difficult.

Anuj Puri, country head, Jones Lang LaSalle said, “In the present market scenario I don’t think there is that much appetite among the HNIs or financial institutions to buy.

The properties on sale continue to have very high valuations and the amount of money available for purchasing these assets is inadequate.”

The last big real estate transaction was a large parcel of land in Wadala which purchased by Lodha Developers for Rs 4,050 crore around one and half years ago.

Jain said that already real estate prices have corrected by around 10-15 per cent and another 10-15 per cent correction is expected in the short-term. “The prices are likely to remain under pressure in 2012 as developers have the mandate to return debt to banks for which they will try to offer discounts to lure customers and increase sales,” he said.