Hines Real Estate in talks with GIC, CapitaLand to sell Mumbai property

Singaporean sovereign fund GIC, CapitaLand (from the same country), and others are in separate talks with Hines Real Estate — the Indian arm of US-based investment firm Hines — for a forward purchase agreement of commercial property in the Kanjurmarg area of Mumbai. The deal size is expected to be around Rs 2,000 crore. 

In a forward purchase agreement, a buyer pays an advance to the seller to buy property at a later date. The property, spread over 4 acres, has a development potential of 1.3 million square feet (sq ft). It will be the first big commercial property deal of the calendar year (CY). 

Recently, tiles manufacturer Nitco, which owns the land, appointed Hines development manager. Hines will do the business planning, construction, marketing, and asset management of the property. The deal marked the entry of Hines into the Mumbai region. It was so far operating in the National Capital Region.

Emails sent to Nitco, Hines, GIC, and CapitaLand did not elicit any response.

Singapore-based investors such as GIC, CapitaLand, and Xander have been actively investing in Indian commercial real estate in the past few years.

GIC bought 33 per cent in the rental arm of DLF for Rs 9,000 crore in 2017 in the biggest deal in commercial real estate so far. GIC bought a majority stake in listed company Nirlon, which owned the information technology (IT) park in Mumbai, for Rs 1,280 crore in 2015. Recently, GIC-managed investment firm Gamnat Pte invested Rs 434 crore in equity shares of Prestige Estates. 

GIC already owns about 4.36 per cent stake in Prestige Estates Projects. In December last year, GIC announced its first exit from its portfolio of Indian properties, when it sold stake in the special economic zone project WaveRock in Hyderabad for around Rs 1,800 crore to Allianz Group’s joint venture entity with Shapoorji Pallonji Group. 

The Singapore fund has investments worth over $4.5 billion in India across residential, commercial, and retail assets. Worldwide, GIC manages over $100 billion in public and private investments across asset classes such as private equity, real estate, and public equity.

CapitaLand has acquired another Singapore-based Ascendas-Singbridge in 2019. The latter had significant Indian portfolio. CapitaLand also held stakes in the malls of Prestige Estates earlier. Capitaland has a portfolio of 26 business parks and IT parks, industrial, and logistics properties.

The fixed income, low-risk, and prospects of listing real estate investment trusts have attracted many global investors such as Blackstone, Brookfield, Canada Pension Plan Investment Board to commercial properties. Blackstone itself owns 70 million sq. ft in office properties in the country, making it the biggest owner of such properties. 

The Indian office market has seen record leasing in CY19 (January-December 2019), with 42 million sq. ft of annual net absorption versus the previous high of 37 million sq. ft seen in CY08, and absorption levels of 25-27 million sq. ft seen in CY17-18, said ICICI Securities.