Hiranandani’s Powai retail space to be acquired for $1 billion

Developed over a decade, the Hiranandani Group, a partnership between brothers Niranjan and Surendra Hiranandani, which owns 4.5 million square feet of office and retail space in Powai, a suburb of Mumbai, will soon be acquired by Canada-based Brookfield Asset Management. This is said to be Mumbai’s largest property transaction in the commercial space which is worth $1 billion or Rs. 6700 crore.

“The process to restructure Hiranandani brothers’ partnership firm is already at an advanced stage and this will clear the way for the transaction. The deal is scheduled to conclude very soon,” a source familiar with the development said.

The developer group which holds the Powai assets is presently a corporate entity and this move may be a precursor to either listing of a Real Estate Investment Trust that would hold the office assets or stake sale.

Hiranandani’s Powai offices are fully leased to giants like Tata Consultancy Services, Nomura Group and Deloitte Consulting India.

Brookfield Asset Management is a global alternative asset manager which has been very active in India off late. The company acquired 100% stake in four special economic zones owned by Unitech Corporate Parks (UCP) and 60% stake in its two other assets in the country for Rs 3,500 crore in 2014.

RMZ Group

The country’s office space market is experiencing a major boom with commercial real estate transactions of nearly $3 billion recorded during the last calendar year. In a series of high profile office space deals of large global investors like Blackstone, GIC of Singapore, Brookfield Asset Management, Canadian Pension Plan Investment Board and Middle East sovereign funds have chased down transaction opportunities. The latest is Bangaluru based RMZ group which has acquired Essar’s Equinox biz Park in Bandra-Kurla Complex in Mumbai.

India’s large grade-A office buildings, riding on a robust services economy, have returned stable yields to investors in an otherwise volatile real estate market.

In a latest, Southern real estate major RMZ Corp has acquired Equinox Business Park, owned by billionaire brothers Shashi and Ravi Ruia of Essar, in Mumbai for Rs 2400 crore. RMZ, in which Qatar Investment Authority is an investor, is said to have paid Rs 19,000 per sq ft for the deal.

RMZ has a target of acquiring 80 million sq ft of rent-yielding office space in the next five years across India’s top cities. This puts RMZ and Qatar combine in direct race with cross-town rival Embassy Office Parks to emerge as the country’s top office landlord. Private equity giant Blackstone Group owns 50% stake in Embassy Office Parks.

The biggest acquisition in Indian office space market is for Rs. 2,050 crore by Brookfield for the majority control in six parks in Unitech Corporate Parks, NCR and Kolkata.  It also paid an undisclosed amount to buy Unitech’s 40% holdings.

Embassy Office Parks acquired Vrindavan Tech Village in Bangalore for Rs 1,950 crore, which is also counted among the other big deals in the commercial space market.