Brookfield Asset Management in October agreed to pay $2 billion for 12.5 million square feet of rent-yielding offices and co-working spaces in Asia's No 3 economy
Some of the world’s biggest investors are snapping up office space in India with plans to turn them into real estate investment trusts, betting that demand will sustain and provide attractive yields in coming decades.
Brookfield
Asset Management in October agreed to pay $2 billion for 12.5 million
square feet of rent-yielding offices and co-working spaces in Asia’s No 3
economy. That’s the biggest real estate deal ever for India. Blackstone Group
bought $1.2 billion of malls and other commercial properties from a local
developer, set to further expand its 9.6 million square feet of fully-owned
real estate assets in India.
These assets will probably
be folded into existing REITs or listed as new ones, according to people with
knowledge of the matter, who asked not to be identified citing rules. Blackstone
is the backer of Embassy Office Parks REIT, which raised $689 million in the
country’s first such listing in April 2019. That was followed by another REIT
that’s also backed by Blackstone in August, while Brookfield is looking to list
one in Mumbai before the end of this year. At least two more are in the
pipeline for 2021, the people said.
“The India story happened
when offices were available for a dollar, that has still not dramatically
changed, you still have offices available at a dollar per square foot per
month,” said Quaiser Parvez, chief executive officer at Nucleus Office Parks
that manages Blackstone’s office portfolio. “India will continue to be strong
pivot or puller of these organisations.”
The attention is focused on
the country’s office market, where low-cost call centers have made way for
research laboratories that offer more stable clients and surer rents.
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