The property arm of Singaporean conglomerate Keppel Corp is adding 1.1 million square feet (92,900 square metres) to its India office portfolio with the INR 2.37 billion ($29 million) purchase of a project in the western city of Pune, according to a regulatory filing on Wednesday.
Keppel Land has entered into a forward purchase agreement to acquire the project, which is currently under development in Kharadi, an eastern suburb of Pune in Maharashtra state, with Indian media identifying the vendor as local builder Kohinoor Group.
“Keppel Land will have project monitoring rights during the development phase as well as sole marketing and leasing rights,” a company spokesperson said in response to Mingtiandi’s queries on Friday. “Keppel Land is actively looking to scale up its presence in India and this acquisition is an opportunity for us to grow our presence in India and capitalise on the growing demand for high quality office space in Kharadi.”
The Singapore giant is acquiring the project, which is slated for completion by December 2024, as net take-up of new office space in Pune more than doubled to 1.2 million square feet in the fourth quarter, from just 568,400 square feet of space absorbed in the fourth quarter of 2021, according to data from Cushman & Wakefield.
Keppel is acquiring the project by purchasing 100 percent of the shares in Silverio Developers Private Ltd, a Kohinoor unit which holds a 3.89 acre (1.57 hectare) site for a project dubbed “Zen One,” according to India real estate information provider Projects Today.
The Zen One project is designed to include 14 office floors above ground level retail and a mezzanine floor, which are divided into 56 office units and seven shops, plus parking.
Silverio is controlled by an entity named Rising Propcon LLP and Sheetal Manoj Gupta, an Indian national holding directorships in several property companies, with the agreement with Keppel obligating the existing owners to develop the project “in accordance with the pre-agreed specifications.”
“This arrangement thereby eliminates the development risk on the part of Keppel Land while retaining its right to ensure that the development is completed as per pre-agreed standards,” the Keppel spokesperson said, noting that construction of the project has yet to commence.
Keppel Land is also lending INR 895.2 million to Silverio, which will become an indirect wholly-owned subsidiary of the company upon the completion of the deal. It said the acquisition will be closed upon securing regulatory approvals and satisfaction of conditions set out in the agreement.
The Keppel Land representative did not share further details regarding the identity of the seller.
Pune Picks Up
The acquisition follows a series of investments by global players into India’s office market over the past year, including CapitaLand India Trust having purchased the four-building International Tech Park Pune office campus in Pune’s Hinjawadi suburb from a CapitaLand Investment joint venture last month for INR 13.5 billion.
Ascendas-Singabridge, since absorbed into CapitaLand, had done business with Kohinoor Group in 2017 when it teamed with Singapore sovereign fund GIC to purchase a 16-acre business park site in Kharadi.
Further to the south, the Canada Pension Plan Investment Board (CPPIB) joined forces with Indian conglomerate Tata Group last April in announcing a $670 million office park project in Chennai.
Office leasing activity in Pune is rising on the back of strong demand but a record high volume of new supply is pushing vacancy rates higher, according to a report by Cushman & Wakefield issued last week.
With corporate occupiers leasing up more space, monthly average net asking rents in Pune rose by 6.2 percent in the fourth quarter of 2022, compared to a year earlier, to reach INR 75 per square foot.
Despite the rise in demand, a surge in supply is making more space available with city-wide vacancy levels in Pune climbing to 11.59 percent by the end of 2022, from 8.49 percent a year earlier, after about 1.3 million square feet of new workspace became operational last quarter, according to the C&W figures.