Singaporean developer Keppel Land announced on Monday that its India joint venture has agreed to acquire a 3.09 hectare (7.635 acre) site in Bangalore for development of an INR 10.4 billion ($143.3 million) mixed-use development.
The 1.18 million square foot (109,625 square metre) combined office and retail facility would be the first commercial development in the South Asian nation for Keppel, which has been partnering with Indian developer Puravankara on residential projects in the country since 2005 via Keppel Puravankara Development Pte Ltd (KPDL).
Bangalore Project to Kick Off in 2019
“The construction of the project is expected to commence after approval of the development and building plans by the relevant local authorities, which is expected to take place some time in 2H 2019,” a spokesperson for Keppel said in an email.
The INR 10.4 billion mixed-use development will include a 1.02 million square foot grade A office tower plus a 160,000 square foot retail-cum-office facility, which will be handed over to food retailer Metro Cash & Carry India Private Limited (MCCIN), a division of German store operator Metro AG.
KPDL acquired the site in Yeshwantpur, northwest Bangalore, from MCCIN for approximately INR 4,050 million ($55.8 million) inclusive of the INR 800 million cost of constructing the 160,000 square foot facility. Dusseldorf-headquartered Metro has more outlets in Bangalore (six) than in any other city in the country.
The new KPDL-managed Yeshwantpur development will be located next to the Sandal Soap Factory metro station, which also serves the mixed-use Brigade Gateway project – comprising the World Trade Centre, Sheraton Grand Hotel, Brigade Orion Mall, Columbia Asia Hospital, Gateway Residences condominium and Brigade School.
The World Trade Centre held the title of south India’s second tallest commercial building between 2010 and 2013, when the area was promoted as a high-rise centre for Bangalore due to its less restrictive height regulations than the CBD, some five kilometres to the southeast.
Bangalore Office Boom
“Bangalore has recorded the highest office space absorption in the Asia-Pacific region in the past five years,” observed Keppel Land’s President (Regional Investments) Sam Moon Thong. He added that this acquisition is expected to “position us well to meet the urbanisation needs for prime office space in Bangalore.”
Average annual office absorption in Bangalore was 10.54 million square feet per annum between 2013-17 and is forecast to grow to 13.55 million square feet for 2018 and 9.95 million square feet in 2019, according to Embassy Office Parks REIT’s draft IPO prospectus.
Separately, JLL India released a report with the Federation of Indian Chamber of Commerce & Industry last month – the Future of India Real Estate: Deciphering the Mid-term Perspective – which forecast that India’s office absorption in 2020 would surpass 2011’s historic high of 37 million square feet.
“The timing of the project could not be better, seeing as the demand for office and retail space, especially in Bangalore, is on an upward trajectory and yielding good returns,” said Puravankara Managing Director Ashish Puravankara in the above-mentioned statement.
Keppel Expands 13-Year Partnership
Keppel first entered India in 2005 through KPDL, in which it owns a 51 percent stake. Since then, KPDL has developed two residential properties in Bangalore: the 1,573-unit Elita Promenade, which was fully sold and completed in June 2012; and the 2,082-unit high-rise Provident Park Square condominium launched in March 2018, with more than 80 percent of the 1,102 launched units sold to date.
In addition, Keppel and Puravankara also partnered with RSJ Developer Pvt Ltd on a 1,278-unit residential development in Kolkata – Elita Garden Vista – which was launched for sale in December 2007. The three-way joint venture – Keppel Magus Development Pvt. Ltd – divested the property in May 2014.
Keppel Ups Stake in Vietnam Developer
Separately, Keppel Land said on Friday that it will double its stake in Ho Chi Minh City-focused housing developer Nam Long Investment by end 2018, to approximately 10 percent from 5 percent.
Keppel acquired VND 500 billion worth of convertible bonds in Nam Long in April 2016, with a convert to equity price of VND 23,500 per share.
On September 28, its wholly-owned subsidiary, Ibeworth Pte Ltd, entered an agreement to divest 51 percent of these convertible bonds to third party investors for VND 393 billion. Ibeworth will then convert the remaining 49 percent of convertible bonds to equity. It is unable to convert more shares into equity as Nam Long is trading at its 49% foreign ownership cap limit. Its shares closed at VND 32,650 today.
Keppel acquired a 5 percent stake in Nam Long in July 2015, at a price of 19,800 per share.