Aiming to double India portfolio to $8 bn in 3-4 yrs: CapitaLand India CEO

In a Q&A, Gauri Shankar Nagabhushanam also dwells on his company's ESG focus and why there is a lot of interest India despite the global headwinds

Singapore-headquartered real estate company CapitaLand has been diversifying its business portfolio in India--a market that accounts for only 3-4 per cent of its over assets--across businesses such as data centres, office spaces and logistics parks. Gauri Shankar Nagabhushanam, CEO, India Business Parks, CapitaLand Investment tells Pratigya Yadav in an interview that the company aims to double the size of its portfolio in India to about $8 billion in the next 3-4 years, from $4 billion currently. He adds that the company is also planning to double its leasable space area to 40-50 million sq ft, and 70 per cent of it would be business parks. Edited excerpts:

How has CapitaLand’s business in India progressed the verticals during the past 1-2 years?

We have 21-22 million sq ft in business parks, 5-6 million sq ft in warehousing and logistics industrial parks. CLI operates multiple business parks in six cities, along with warehousing and data centres, with a combined portfolio of 25-26 million sq ft in India. From our perspective, both have done well. A lot of IT recruitment happened in 2020 and 2021 but there was no major increase in office take-up, and it was pent-up demand that triggered the office sector’s growth.

In 2022, India had 56 million sq ft office absorption--the highest in the world. Office space absorption was 40 per cent higher in 2022 compared with 2021 which is a significant jump. Probably for the first time ever in the world, India’s office absorption was greater than countries like the US, China and Japan, as the Indian growth story is still intact. Whereas, the West is facing headwinds in terms of economic growth and stability subsequent to Covid disruption.

How much total leasable area do you have across verticals? What are your expansion plans?

For Business & IT parks, we currently have 21 million sq ft of built-space, of which 90 per cent has already been leased. We are constructing 11 million sq ft of additional office space. Development is ongoing in almost all the major cities and (the projects) will be operational in the next 3-4 years. We are also looking to acquire 5-6 million sq ft inorganically. Overall, we are planning to double our portfolio of leasable areas in the next 3-4 years in the IT office space. In industrial warehousing, currently six million sq ft has already been leased, 7-8 million sq ft is under development. Along with that, the company is also acquiring 10-12 million sq ft of land. CLI plans to double its industry warehousing portfolio within the next two years and quadruple it in next 5-6 years. This will create a portfolio of 12-13 million sq ft by 2025 and another 15-16 million sq ft by 2028.

How are the company’s investments and revenues faring? Any major announcements in the near future?

In India, we have been diversifying our business portfolio across asset classes including data centres, office spaces and logistics parks. For CapitaLand, India is only about 3-4 per cent of its overall assets currently. In terms of valuation, the company's portfolio size is about $4 billion and we are aiming to double it to $8 billion in the next 3-4 years. We are also planning to double its leasable space area in the next 3-4 years, to 40-50 million sq ft, and 70 per cent of it would be business parks.

CapitaLand India Trust (CLINT) earns about Rs 1,200 crore of revenue each year, from all of our properties in India. We typically grow based on investor appetite and the availability of the right investment opportunity. We are currently on the road to raising additional capital from private equity investors. We hope to raise it by the end of this year. Subsequently, the investments under the private fund will also start. Also, we strongly focus on ESG and have raised nearly $400 million in green loans so far in India. Globally it is close to $10 billion.

Which major cities are you focussing on and how do you plan to expand further?

We have a pretty equal and diversified presence in all markets. CapitaLand India (CLI) is focusing on key metro cities such as Chennai, Bengaluru, Hyderabad, Pune and Mumbai for business parks. In industrial warehousing and hospitality, we are strategically planning to enter tier-2 and 2 cities as well. In industrial warehousing, we ventured in Kolkata and Lucknow. We are looking to expand in Lucknow, and enter Guwahati and Bhubaneshwar. Mumbai and Chennai are two major cities for our data centree. We also have an additional development set-up coming up in Hyderabad and Bengaluru. We are also looking to expand in the NCR region, probably in Noida.

Do you see any impact of global headwinds, including layoffs on your business?

I think the global downturn does have an impact, and whenever such a situation arises, companies pull back on their investment decisions which delays projects and capital investments. Such an impact is felt in the Indian market too. However, the impact in India is lower than in other markets, and interest in the Indian market has not dwindled but has, in fact, gone up due to global uncertainties. In 2023, we are little cautious and will continue to consolidate our business. By mid 2024, most of the headwinds would be resolved, and we are expecting to get back to the good old days then.