As US investors adopt a more cautious approach to the expansive 700 million square feet Indian property market, Singaporean investors and property developers are seizing the opportunity presented by reduced competition and attractive deals.
Rough calculations, based on their public announcements, indicate that these investors are considering investments totaling approximately $8 billion (equivalent to Rs 66,400 crore) in Indian real estate.
Among these investors, Singaporean sovereign fund GIC is actively involved in substantial transactions within the office property sector, while other entities like CapitaLand, Keppel Corporation’s real estate division Keppel Land, and Mapletree are launching fresh funds and embarking on the development of new real estate projects.
As an example, GIC is nearing the completion of a deal to acquire the Waverock property in Hyderabad, jointly owned by the Shapoorji Pallonji group and Allianz Real Estate, for a sum of Rs 2,200 crore. In May of this year, GIC partnered with Brookfield India REIT to jointly acquire two substantial commercial properties, totaling 6.5 million square feet, from Brookfield Asset Management. The transaction, valued at $1.4 billion, saw GIC and Brookfield India REIT enter into an equal partnership for this investment.
GIC was reportedly in contention to acquire the warehousing assets of ESR Allianz, but ultimately, the assets were acquired by Blackstone, according to sources.
Singaporean investors are finding attractive pricing in the Indian market due to reduced competition, as highlighted by Shobhit Agarwal, Managing Director at Anarock Capital. Unlike the US markets, Singaporean markets are experiencing growth. Sanjeev Dasgupta, Chief Executive at CapitaLand Investment India, concurred with Agarwal’s assessment, stating that there seems to be increased interest in India this year among Asian investors. Western investors, on the other hand, are reportedly more focused on managing their existing investments in Europe and the US.
CapitaLand Investment has set an ambitious goal of doubling its portfolio to 50 million square feet over the next 4-5 years. Presently, CapitaLand has an operational portfolio of 29.7 million square feet, spanning business parks, industrial facilities, and logistics parks.
Additionally, CapitaLand Investment has more than 11 million square feet of office space currently in development across six cities, including Bangalore, Chennai, Hyderabad, Pune, Mumbai, and Gurgaon. Their logistics platform, known as Ascendas Firstspace, is set to invest in critical warehousing and manufacturing hubs within six major cities, along with emerging markets, as explained by their CEO.
In addition to its current ventures, CapitaLand Investment is constructing four data centers: one in Navi Mumbai, one in Chennai, and two within its International Tech Parks in Bangalore and Hyderabad. These data centers will have a combined capacity exceeding 200 megawatts. Furthermore, the company recently unveiled its business park development fund, CapitaLand India Growth Fund 2, with an intended fund size of S$525 million (equivalent to ₹3,261 crore) for investments in Grade A business parks across India.
Keppel Land, a part of Keppel Corporation, is also in the process of launching an India property fund and has registered with SEBI for this purpose. The investor-developer has been actively acquiring and investing in Indian properties, including residential properties.
India is a key market for expansion for Keppel Land, and the company is currently working on an Indian strategy mandate while exploring opportunities in the country, as stated by a Keppel spokesperson.
Mapletree, another Singaporean investor and developer, is reportedly planning to double its portfolio in India over the next three years, according to insider sources.
A senior executive at a Singapore-based investor noted that since Singaporean investors entered the Indian real estate market, their investments have consistently increased, and this trend is expected to continue.
Industry observers point out that many US funds like Blackstone and Warburg Pincus are showing reduced interest in office properties in India. After Blackstone’s acquisition of the Prestige Group’s commercial portfolio for ₹9,160 crore in 2021, there have been no major office property deals from Blackstone in India. However, Blackstone is actively developing its logistics property platform.
Piyush Gupta, Managing Director of Capital Markets & Investment Services at Colliers India, explained that the slowdown in the US market, coupled with changing workplace dynamics, has led to increased vacancies and reduced real estate demand, causing stress in the US market. As a result, investors are facing redemption pressures, which are causing them to be cautious about making large fresh commitments and leading to the liquidation of portfolios in emerging markets.
Despite these challenges, Gupta noted that most investors maintain a positive outlook on investing in India. A significant portion of global investment in India has come from American and Canadian investors, including three out of four listed Real Estate Investment Trusts (REITs) in India that are sponsored by Western investors.