Office Attractions

Global sovereign funds and private equity players are showing immense interest in India’s commercial real estate segment.

- Mahesh Nayak

The biggest deal ever in the Indian commercial realty segment was sealed last October, when Canadian private equity giant Brookfield Asset Management acquired the entire 4.5 million sq. ft. commercial portfolio of leading domestic builder Hiranandani Group for $1 billion, òr ₹6,400 crore. (See Top Beneficiaries.) With this single acquisition, the total private equity investment (PE) in Indian commercial real estate in 2016 rose to $1,997 million, almost twice the $1,154 million pumped in the previous year (see Double Gain). The Hiranandani buyout was Brookfield’s second major foray into Indian commercial real estate. In 2014, it had taken over four properties of Unitech Corporate Parks (UCP) in special economic zones and acquired 60 per cent stake in two of its other assets as well for ₹3,500 crore. Later, it acquired the remaining 40 per cent of the two other properties too.

Another deal in 2016 saw Dutch pension fund APG invest $450 million in the Xander Group’s real estate retail arm in India, Virtuous Retail South Asia. The Xander Group is already developing 66 million sq. ft. in India (including residential projects). Singapore-based developer and investor Ascendas-Singbridge has invested close to $2 billion in the commercial segment. “Even as we speak, our company is actively discussing another deal in one of the top six cities of India,” Sanjay Dutt, CEO, India Operations told BT. Sovereign funds of countries such as United Arab Emirates (Abu Dhabi Investment Authority), Qatar (Qatar Investment Authority), Canada (Canada Pension Plan Investment Board) and Singapore (GIC) are all in the hunt, as are global PE giants like KKR, Warburg, Propium PE and Sun Apollo. GIC is said to be close to buying a 40 per cent stake in domestic real estate heavyweight DLF’s rental business, but the deal is taking longer than expected due to differences over valuation.