“Post demonetisation, the real estate market has become dull,” says Vijay Mallya “Post demonetisation, the real estate market has become dull,” says Vijay Mallya

The re-auction of embattled businessman Vijay Mallya’s Goa property, Kingfisher Villa, yet again turned out to be a damp squib on Thursday despite a reduction in reserve price by 5 per cent to Rs 81 crore by lenders. This is the second failed attempt by the 17-lender consortium this week to recover its dues of over Rs 9,000 crore from Mallya by selling his prime assets. On Monday, the lenders failed to get any buyer for Kingfisher House in the city, when it was put under auction for the third time.

“There was hope that Villa could get some buyer this time, but unfortunately, none of the bidders came forward. The auction failed this time as well,” a source said. According to experts, one of the reasons for failure of the auction on Thursday could be that people are seeing correction in real estate and and they expect lenders to reduce the reserve price further for the villa.

“Post demonetisation, the real estate market has become dull. The property prices have come down. Bidders would not have come forward for buying the villa as they are hoping that lenders will lower the reserve price for the property,” said one of the analysts. The government on November 8 announced demonetisation of old Rs 500 and Rs 1,000 notes to root out black money, counterfeit currency and corruption. The move has affected the real estate market where black money is rampant for buying and selling properties.

In October, when the villa was put under hammer for the first time, the reserve price was kept at Rs 85.29 crore. It failed as bidders found the reserve price too high. The villa was once used by Mallya to host lavish parties. The lenders took physical possession of the property in May this year after a long legal battle with United Spirits over tenancy rights. The villa was owned by United Breweries Holdings and mortgaged by the now-grounded Kingfisher Airlines to the consortium of banks to obtain loans in 2010.

In the third failed auction of Kingfisher House, the erstwhile headquarters of the defunct airline, on Monday, the lenders had reduced the reserve price by 15 per cent to Rs 115 crore. The prime property has a built-up area of over 17,000 sq ft and is located in the plush Vile Parle area near the domestic terminal in Mumbai.

Mallya owes over Rs 9,000 crore to lenders like SBI, PNB, IDBI Bank, BoB, Allahabad Bank, Federal Bank and Axis Bank, among others. This includes a little over Rs 6,000 crore in principal amount and the rest in accrued interests and penalties. Mallya had left the country on March 3 this year and is currently said to be in Britain.

Last month, CBI had initiated extradition request to bring him back from Britain through a special court in Mumbai. The investigative agency secured a non-bailable warrant against Mallya, following it up with an extradition request from the special court to competent authorities in Britain.

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