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.

commercial real estate

In most recent realty news, southern real estate developer, RMZ Corp is in the advanced stages of negotiations to acquire Equinox business park in Mumbai from the Ruias of Essar Group. Sources familiar with the development confirmed that the transaction has been concluded for a monstrous Rs. 2400 crore. While billionaire brothers Shashi and Ravi Ruia are divesting non-core assets to pare Essar’s debt burden, this is by far the largest real estate deals of Mumbai and one of the biggest in India.

Bangaluru  based RMZ, backed by Qatar Investment Authority (QIA), will pay around Rs 19,000 per sqft for Essar’s 1.2 million sqft biz park, located adjacent to Bandra Kurla Complex which houses lessees like IDFC, Tata Communications, Crompton Greaves, Nissan and Lafarge among other Essar companies. RMZ manages about 20 million sqft of commercial office space across multiple cities and is currently on the prowl for large acquisitions to build an 80 million sqft portfolio in the next five years.

Anshuman Magazine, chairman and managing director, CBRE South Asia, notes that The Essar – RMZ deal shows an improvement of interest in commercial real estate. Such core rental yielding assets have lower risks associated as there is no pressure of development and leasing.

Anuj Puri, JLL India chairman and country head,  said in spite of the various influences that shape up real estate markets across India, Mumbai’s intrinsic equity as India’s financial capital remains undiminished and continues to drive major decisions by corporate and investment houses.

In some of the other large transactions, GIC of Singapore acquired 69% stake in Nirlon, which manages a 2 million sqft office park in Goregaon suburb, for 1300 crore in December 2014.

About two months ago, pharmaceutical conglomerate Abbott acquired 4.35 lakh sqft of commercial space in a tower developed by Godrej Properties in Bandra-Kurla Complex for Rs 1,479 crore.

In another massive multi-layered deal in office real estate market, Brookfield purchased Unitech’s Corporate Park for Rs 2050 crore  for majority control of six parks in NCR and Kolkata. Furthermore, Embassy Office Parks, backed by Blackstone, acquired Vrindavan Tech Village in Bangalore for Rs 1950 crore.

India’s large grade office buildings, riding on a robust services economy, have returned stable yields to investors in an otherwise volatile real estate market. Assets worth nearly $3 billion have together been acquired by global investors like Canadian Pension Plan Investment Board, Brookfield Asset Management, Blackstone  and Middle East sovereign funds among others during the last calendar year.