Going by Blackstone India’s recent news on planned acquisitions in Commercial Real Estate, its becoming increasingly apparent that India’s Office space market is now seeing renewed momentum from such major entities. The maturity of the Commercial real estate model in India is also visible in such planned investments.
Blackstone’s has been in the news for planning to acquire majority stakes in IT Special Economic Zones in Pune and also considerable interest again in acquiring an existing stakeholder’s pie in India’s largest IT SEZ at Bangalore.
Last week, Indiareit too announced its plans for raising a 800 Crore rental yield fund for commercial properties across India.
If you take stock of the the office space segment in India,it’s no doubt a rapidly emerging goldmine for international investors. The growth curve has been steep and unstoppable. Office stock in India crossed 50 mn sq ft in 2004, 100 mn sq ft in 2006, 200 mn sq ft in 2009 and is expected to cross 400 mn sq ft in 2013.
IT / ITES is driving most of the growth, with nearly 50% of the transactions of investment grade office space done by IT/ITeS companies. While IT/ITeS industry has necessitated higher grades of construction, it has benefited due to the affordable rents offered at several Tier I cities of India. Over 60% of the operational investment grade offices in top seven cities currently provide space at a lease rental of less than a-dollar-per sq ft (or less than INR 45 psf), primarily in secondary and suburban locations. These locations offer large land parcels that are ideal for the development of IT/ITeS campuses.
When it comes to commercial real estate, India is being taken very seriously by the rest of the world. In that respect, we are well on the way to global integration. The Indian retail explosion, which was briefly contained by the recent economic downturn, is now in full roar again as well.
If you are seeking Office space in India, talk to our Corporate Real estate team at Sparta Strategy, India’s leading FDI Consulting firm.
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