CapitaLand looks to foray into residential and retail real estate

Singapore-based investor CapitaLand is looking into entering residential and retail real estate in this country, a senior executive said.

It had recently acquired the business units of Temasek Holdings-owned Ascendas Singbridge.

“We have good business in infotech and logistics centres.  We are exploring whether we can put together a plan to enter areas such as residential and retail, and build a team,” said Sanjeev Dasgupta, chief executive of Ascendas India Trust, listed on the Singapore Stock Exchange (SGX). Dasgupta said they could tap expertise from Singapore in this regard.

CapitaLand used to have stakes in the malls developed by Prestige Estates — the latter bought these back in January last year, for Rs 342 crore.

Dasgupta also said Ascendas was looking to almost double its commercial property portfolio in the next four years. It has 13.3 million sq ft of commercial assets, including seven information technology (IT) parks and six warehouses.  “We have 6.6 mn sq ft of development potential in Hyderabad, Bengaluru and Chennai. Another seven mn sq ft is already signed up and under construction,” he said. 

The seven million sq ft is part of a forward purchase agreement, where it enters into an agreement with developers. Once the assets are built, it acquires these. Recently, it entered into one such deal with a subsidiary of a developer called Arshiya to invest in a warehouse at Panvel in Navi Mumbai. 

The company is also getting into co-working spaces. It has set up such a centre at its IT park in Bengaluru. “Once it takes off, we will look at opening in other IT parks of Ascendas,” said Dasgupta.

Ascendas would not float a real estate investment trust (REIT) in this country, he added. “We have a REIT listed on the SGX and it is trading at good levels. Cost of financing is critical in a REIT and due to the NBFC (non-bank financial corporation) crisis here, liquidity has become tight. In Singapore, we do not have to deal with such issues.”

Ascendas Singbridge had launched a $300-million programme in June 2018 to invest in prime logistics and industrial real estate.

With the acquisition of Ascendas’ units, CapitaLand has become the largest real estate company in Asia, with assets of $90 billion. It manages about $2.1 billion in India. There are eight listed REITs and business trusts, and over 20 private funds.

Private equity (PE) investment in real estate rose 26 per cent in the first half of this year, to nearly Rs 28,000 crore ($3.9 billion). Driven by higher inflow in commercial and warehousing projects, according to property consultant Colliers. PE inflow from foreign investors increased 28 per cent.

Building blocks

• Ascendas looking to double portfolio of commercial properties
• It has 13 million sq ft of commercial assets, including seven IT parks and six warehouses
• It has 6.6 million sq ft of development potential in southern cities 
• 7 million sq ft is already signed up and is under construction
• It entered into forward purchase pact with Arshiya to invest in a warehouse in Panvel 
• It has set up a co-working centre at its IT park in Bengaluru