CLINT is adding to its portfolio in Hyderbad’s HITEC City
CapitaLand India Trust (CLINT) is set to add to its collection of 12 office buildings in Hyderabad after announcing a fresh deal with long-time partner Phoenix Group this past week.
In a bourse filing Friday, the trustee-manager of the SGX-listed REIT said that it has entered into a forward purchase agreement with Phoenix for development and acquisition of 2.5 million square feet (232,260 square metres) of office properties in HITEC City, a government-backed district which has become a tech hub in the capital of Telangana state.
“The forward purchase allows us to secure prime assets that will further strengthen our presence in Hyderabad, which has strong leasing demand from multinational companies,” said Sanjeev Dasgupta, chief executive officer of the REIT’s manager. “The buildings are situated within the city’s prime IT Corridor in HITEC City and CLINT is well established in this location.”
Together with Bangalore to its south, Hyderabad accounted for 51 percent of grade A office leasing across India in the first quarter, according to Colliers, as inland southern metropolis draws local and international occupiers setting up the service outsourcing hubs known as global capability centres, through lower costs and improving infrastructure.
Establishing Fifth Hub
The forward purchase agreement is the fourth in a series of such business park buys which CapitaLand India Trust has executed with Phoenix Group, dating back to 2011, when it was still known as Ascendas India Trust.
Sanjeev Dasgupta, CEO of CLINT’s manager
CLINT already owns 5.2 million square feet of commercial space across the three IT business parks in Hyderabad, with committed occupancy ranging from 75 to 98 percent as of March, with a fourth set of properties in the city on the way within the next 18 months. Hyderabad tied with Bangalore as the trust’s largest market as it generated 27 percent of base rental income in the first quarter, according to its latest business update.
HITEC City. where CLINT is making its latest commitment, is already home to major offices for Microsoft, Accenture and Oracle and was singled out by Colliers as a major attraction for tenants this year.
“Within Hyderabad, the trifecta of HITEC City, Gachibowli and Madhapur continued to drive leasing activity in Q1 2024,” Arpit Mehrotra, managing director for office services with Colliers India said in a statement. “Of the 2.9 million square feet of Grade A space uptake in the first quarter, over 80 percent of the demand was concentrated in these three localities.“
The property consultancy pointed to proactive government policies, infrastructure upgrades and a favorable business ecosystem as integral to Hyderabad’s appeal to “investors, occupiers, and leading developers of commercial real estate in India.”
CLINT noted that HITEC City is home to major companies including Tata Consultancy Services, the IT services division of India’s Tata Group, which is already the largest tenant in the trust’s nine business parks.
Fifth Hyderabad Location
Under the terms of the agreement, CLINT will provide Phoenix with an initial INR 2.15 billion ($26 million) to refinance existing loans used to acquire the project’s 8.8 acre (3.6 hectare) site, as well as other expenses.
The deal is to be completed in phases, with the trust providing funds for construction and then acquiring buildings from Phoenix once they are completed and at least 90 percent leased. The trust’s manager expects the first phase of the project, measuring about 700,000 square feet, will provide a pro forma annual net profit of S$4.5 million ($3.33 million) once stabilised.
Spread across 200 acres of land in Hyderabad’s suburbs, HITEC City is located northwest of the city’s central business district and around 18 kilometres (11 miles) from the Secunderabad Railway Station transport hub.
The listed trust now owns 12 completed IT buildings in Hyderabad, five of which were built by Phoenix, which also developed aVance Business Hub. Under existing forward purchase deals CLINT is set to acquire two more buildings in aVance Business Hub from Phoenix within the next 18 months, with those properties having a combined floor space of 2 million square feet.
The partners signed their first forward purchase agreement in 2011, when Ascendas India Trust agreed to acquire five buildings in aVance. In 2018, the pair inked a similar deal for the development of two buildings spanning 1.85 million square feet in HITEC City, with those projects having since been completed.
CLINT’s footprint in the city also includes assets in International Tech Park Hyderabad (ITPH) and CyberPearl.
In September of last year, CLINT unveiled a plan to redevelop the International Tech Park Hyderabad that will nearly double the leasable area in the complex from 2.6 million square feet currently to 4.9 million square feet.
India to Notch Over Half of APAC Office Deals
CapitaLand’s latest Hyderabad deal aligns with a brightening outlook for the country’s office sector.
In its Asia Pacific Office Outlook 2024 report, Cushman & Wakefield said eight Indian cities recorded the highest net office absorption in Asia Pacific over the past year and a half, driven by the expansion of local companies and an ongoing boom in global capability centres.
Indian cities are expected to maintain their momentum in the near term, with the consultancy estimating that occupiers will lease a net 40 million square feet of grade A office space in the country annually through 2027, accounting for 52 percent of total office take-up in APAC during the period.
Leave a Reply