What do you do with your new $120 million home? Visit it on Saturdays and Sundays.
The billionaire Indian Poonawalla family last week agreed to pay that much for a former maharajah’s residence in Mumbai that most recently had been the U.S. consulate in the city. The owners of Asian’s largest maker of vaccines may use it about two days a week.
“We always visited Mumbai on the weekends,” Adar Poonawalla, chief executive of Serum Institute of India Ltd., said in an interview Wednesday in Pune where he lives, about four hours from Mumbai. “We have a lot of our horse racing in Mumbai on the weekends. It’s not going to increase my visits.”
Lincoln House, as the building has been called during its U.S. ownership, sits on a two-acre plot on the shores of the Arabian Sea in the Breach Candy neighborhood of south Mumbai. The 8 billion rupee ($120 million) price, which includes taxes and other fees, is a record for a residential sale in the city, according to local media reports including Livemint.com.
Because of its heritage, Lincoln House has landmark status and can’t be fundamentally altered, but that didn’t deter Poonawalla.
“We hope to open up the rooms and -- because at the moment it is designed as a consulate -- there are a lot of security rooms and waiting rooms and all that,” said Poonawalla, 34. “We’ll have to demolish what we can internally. We will have to do it up a little bit, with the permission of the government.”
Maharajah of Wankaner
He hopes to improve the appearance of the facade, “but we can’t demolish it. We might build another floor, but that’s all dependent on the permissions.”
The property was erected in 1938 by the Maharajah of Wankaner and sold to the U.S. government in 1957 on a 999-year lease. It served as the U.S. consulate for more than half a century, until surging demand for visas led the U.S. to shift activities to a 10-acre plot in the Bandra-Kurla business district of northern Mumbai a year ago.
Poonawalla said the decision to buy Lincoln House wasn’t a business one.
“In a city like Mumbai, you probably won’t get an opportunity like this in the next 10 to 20 years,” he said. “To get a two-acre plot in a city like Mumbai is virtually impossible.”
He finished the first negotiations in two to three hours, he said. “I did have a visit, a cursory look around. I didn’t want to get into a bidding war.”
Prices Dropping
The net worth of Indian billionaires continues to grow, and “they want to celebrate their life and financial success,” said Sanjay Dutt, executive managing director for South Asia at Cushman & Wakefield Inc. in Mumbai, whose firm brokered the deal. “Private bungalows are very few and most sought after.”
Adar Poonawalla’s father, Cyrus, is the founder and chairman of Serum Institute. The elder Poonawalla has $8.5 billion in assets, including India’s largest stud farm, making him the country’s 7th richest person, according to the Bloomberg Billionaires Index.
The purchase of Lincoln House occurs when home prices in Mumbai, India’s most expensive market, are starting to drop. House prices slipped almost 2 percent in the quarter ended June 30 from the record of 13,120 rupees ($198) per square foot set in the quarter ended Dec. 31, 2014, according to research and consulting firm Liases Foras Real Estate Rating & Research Pvt.
Prices may fall as much as 20 percent over the next year as record-high prices dent demand amid a glut of supply, according to Khushru Jijina, managing director at Mumbai-based Piramal Fund Management Pvt., the nation’s largest real estate fund.
Adar Poonawalla isn’t concerned. The property may be worth three to four times his purchase price in 10 years, he said.
“The trend that I have observed in London, New York and Mumbai is that prices for prime properties in prime locations have never seen a dip,” he said. “Even in the worst times of recession there is always a demand and always takers. This was an opportunity which comes once in a lifetime,” Poonawalla said.