Author Archives: Rachna Ranjan

India realty plan unchanged for Donald Trump

Donald Trump’s election as the next US president won’t alter the Trump Organization’s India business plans. “The Trump Organization currently has five active projects in India (four residential and one office tower) and those developments will proceed as planned.

They will remain under the Trump brand,” a Trump Organization spokesperson told ET. “We are incredibly proud of projects in Pune and Mumbai and look forward to sharing additional updates on our newest developments in the coming months.”

India’s Commercial Property Market – Opportunity

While India’s residential real estate market is currently facing a slump, the commercial real estate market is looking bright. Strong economic growth and growth expectations, and high-growth sectors such as e-commerce and pharmaceuticals are driving demand for office space and warehousing.

While demand is on the rise, supply of good quality assets is limited resulting in falling vacancies and upward pressure on rentals. High vacancies mainly affect low quality buildings. International investors have begun to take note of the opportunity. Blackstone – India’s largest office landlord – is well positioned to profit.

A lot of money is looking at India: CPPIB’s Mark Machin

Mark Machin, who worked as CPP Investment Board’s (CPPIB) first president for Asia, was recently named president and chief executive of Canada’s largest pension fund and is responsible for leading its investment activities. As of 30 September, the CPP Fund had net assets of Canadian $300.5 billion. CPPIB opened its India office in 2015 and has committed about $3.7 billion in the country so far. In an interview, Machin talks about India as an investment destination, increasing allocation to emerging markets and the fund’s plans.

Tech giant GE checks into Chennai, to set up 1.7 lakh square office back office on OMR

Chennai is witnessing shortage of quality office space. Notwithstanding this, office space absorption levels in the city rose to 5.25 million sft in 2016, from 5 million sft in 2015. Engineering and technology giant GE is setting up shop in Chennai. The Fairfield-Connecticut headquartered company will set up a back office and processing centre across 1.7 lakh square feet at Ramanujam IT Park in Taramani.

“GE signed for space a few weeks ago. They want to set up a back office and processing centre,” sources said. GE could not be reached for comment. According to industry benchmarks, a back office usually allocates 50-60 square feet space per employee and 100 sft for software development work. “A 1.7 lakh sft transaction should be encouraging,” sources said.

Nasscom lowers IT export growth target to 8-10% for 2016-17 crushing commercial realty

Commercial real estate absorption is likely to be affected with the software industry body Nasscom lowering IT export growth target to 8-10% for 2016-17 amid global macroeconomic headwinds, including the fallout of Britain’s exit from the European Union as well as Donald Trump’s victory in the US presidential polls.

At the start of the year, Nasscom had projected 10-12% growth for Indian software services, including business process management, for the current fiscal. Nasscom estimated the incremental revenue addition to be between $8 billion and $10 billion in 2016-17, against $10 billion in 2015-16.

Samsung India to lease 1 lakh sqft space at Oberoi Realty’s Commerz building

Consumer durables firm Samsung India Electronics Ltd has signed a deal to take up around 1 lakh sqft of office space on lease to set up its new corporate office at Oberoi Realty Ltd’s commercial property Commerz II in Goregaon suburb of Mumbai, three people aware of the development said.

The Korean company will pay Rs.135 per sqft as monthly rental with an advance payment for six months, said the first person mentioned above, adding that the deal has been signed for the next five years. Earlier in 2016, Samsung signed a deal to lease 3.5 lakh sqft of space at Two Horizon Center, a premium office building developed by DLF Ltd at Gurugram in the National Capital Region. DLF rented the space that Samsung currently uses as its Indian headquarters for Rs140 per sqft per month, in one of the largest recent commercial property lease deals.

Bright days ahead for commercial real estate

The outlook for 2017 is likely to be robust too with demand from manufacturing, logistics and consumer goods besides the information technology and outsourcing sectors. A paradigm shift in commercial space leasing is likely to boost demand, as firms that historically bought space prefer leasing to accommodate changing needs.

Higher use of technology has made jobs more process drive and less manpower driven. This means a $1 billion revenue growth would need only 20,000 people as against 35,000 at present that in turn would limit need for space.

Workspace solutions market to grow by 10% in next five years

Growth in the Indian commercial sector is expected to positively impact the ‘workspace solutions industry’ in the coming years. The sector is expected to witness 10% year-on-year growth in the next five years, according to the industry experts.

Workplace solution involves providing end-to-end commercial real estate solutions to companies across sectors – from concept to functionality. It includes strategic location studies, transaction advisory, fit-out management (design and execution) and facilities management. On an average close to 35-40 million sq. ft of office space is absorbed in India annually, according to Shrinivas Rao, CEO-APAC, Vestian. Of the 35 million, about 25 million sq. ft require services from a workplace solutions provider, be it transactions, fit-outs or facilities management.

Brazil commercial real estate prices and lease values fall in Nov.

The price of Brazilian commercial real estate has continued to contract, signaling the sector remains vulnerable to the effects of the country’s recession, according to market data released Tuesday. The monthly FipeZap indicator showed commercial property prices dropped 0.45% in November from the prior month, extending year-to-date losses to 3.18%, the research group said. In October, commercial real estate prices slipped 0.28 percent.

The FipeZap indicator, which covers the cities of Sao Paulo, Rio de Janeiro, Porto Alegre and Belo Horizonte, also showed leases fell 0.35 percent in November from October and dropped 7.9 percent year-to-date. Leases in Rio de Janeiro fell the most among the cities sampled, down 13.2 percent so far this year. The city has borne the brunt of a downsizing oil industry and the effects of a bankrupt state government.

Blackstone in race for $250 million stake in K Raheja

Blackstone Group has filed a formal bid to buy a minority stake in the commercial unit of K Raheja Corp, one of India’s top three owners of tenanted offices, vying with Singapore’s Temasek Holding and rival private equity investor Warburg Pincus, people directly familiar with the matter said. The three bidders are in the final lap, though Temasek is said to be the front-runner as of now, sources added.

Blackstone’s bid is interesting as it has already emerged as the largest landlord of Indian commercial real estate, and is also in advanced talks to buy 40% stake in DLF’s commercial unit. The billionaire Chandru Raheja-led company plans to raise $250 million by divesting around 15% stake in the rent-yielding office space assets that operate under the brand Mindspace. It owns over 20 million sq ft of leased space primarily in Mumbai, Pune and Hyderabad.