MUMBAI: The Maharashtra government has formally acquired the iconic Air India Building at Nariman Point in South Mumbai for Rs 1,601 crore. The transfer of ownership was completed last Tuesday in the presence of Chief Minister Devendra Fadnavis at Mantralaya, following which the procedure of acquiring the property by the state government administration began.

The iconic landmark 23-storey sea-facing tower, built in 1974 on reclaimed land, was previously owned by Air India Assets Holding Ltd (AIAHL) and housed several offices, especially those of Air India and Indian Airlines. The deal includes the transfer of approximately 46,470 square metres of prime office space. Officials estimate that the acquisition will help the state save around Rs 200 crore annually in rent by shifting various government departments currently housed in scattered private buildings.

The Maharashtra Cabinet had approved the purchase in November 2023, and the Centre gave its nod in 2024. As part of the agreement, the state also waived nearly Rs 298 crore in unearned income and interest dues related to the leased land. 

Speaking after the signing ceremony, Chief Minister Devendra Fadnavis said, “This building will not only solve our space crunch but also bring several departments under one roof, improving efficiency and governance.”  Public Works Minister Shivendrasinh Bhosale described the move as a “historic and strategic decision” that will allow the government to create a modern administrative hub close to Mantralaya.

Bhosale added that renovation work would begin soon, though it may take over six months to make the building fully operational, as many systems, including lifts and central air-conditioning, need repairs.

The Air India Building has been a prominent landmark on Mumbai’s Marine Drive skyline for over five decades. Its acquisition comes at a time when the state government is aggressively expanding its administrative infrastructure. The move is expected to boost property values in the Nariman Point area while providing a long-term asset for the state.

The opposition parties in the state, however, raised questions about the high cost of acquisition and the financial implications for the state exchequer. The government defended the deal, stating that the long-term benefits far outweigh the initial investment.

The transaction by the state is being viewed as one of the biggest government real estate purchases in recent years and is likely to set a precedent for future asset monetisation and consolidation efforts by many state governments across the country.