Eye on acquisitions, Prestige Estates plans to foray into NCR, Mumbai, Pune

Prestige Estates plans to become a pan-India office property developer, to take advantage of the booming segment and its large client base.

The Bengaluru-based developer is looking to enter several cities, such as those in the National Capital Region (NCR), Mumbai and Pune, among others, says Irfan Razack, chairman and managing director.

Recently, Singapore-based sovereign fund GIC signed a term sheet with Prestige to buy a stake in the subsidiary of the latter which owns assets of eight million sq ft.  Prestige is also set to start an 800,000 sq ft information technology (IT) park in Pune and had started work on another IT park in Kerala. Its 350,000-sq ft project in GIFT City, Gujarat, is ready. 

The company is close to signing a deal to develop a property in Gurugram and has signed an agreement at Airoli in Navi Mumbai.

“We have clients willing to take spaces in whichever cities we enter and set up offices,” Razack said.

Prestige has 8.57 mn sq ft of operational office properties, 4.13 mn sq ft of ongoing projects and nine mn sq ft earmarked to start work on. Prestige and its partners expect to have rental income of Rs 10 billion in FY19, of which Prestige has Rs 8.25 billion.

“Rents have gone up 30 per cent for Grade-A properties,” Razack said, adding they have separate sectoral reporting for the office, retail, hospitality and scale-up investments in different verticals.

Ashok Kumar, managing director, Gennext Partners, said Prestige had changed its strategy of selling smaller offices to holding these. 

“I do not know how much they will succeed in north India but in the West, they should do well,” he said.

At 11.4 million sq ft, the first quarter of 2018 saw a 23 per cent increase over a year in gross office take-up in the country. Representing 34 per cent of total leasing volume, Bengaluru continued to account for the highest share of absorption, followed by the NCR with 26 per cent, Pune with 16 per cent, Mumbai with 10 per cent, Chennai with nine per cent, Hyderabad with four per cent and Kolkata with one per cent.

Prestige is also looking at building six malls. Currently, it has seven operating malls. 

Early this year, it had bought out investor CapitaLand’s stakes in its malls and residential projects for Rs 3.4 billion. This would boost its annuity portfolio by an estimated Rs 750 million a year in rental income, it said.