Kanakia inks deal with Hines, Mitsubishi, Sumitomo for 1.5 million sq ft BKC project

The project has a development potential of 1.5 million sq ft

Mumbai-based real estate firm Kanakia group has signed a deal with global real estate firm Hines, as well as Japanese conglomerates Mitsubishi Estate and Sumitomo Corporation to develop a 1.5 million square feet mixed-use development, including offices, retail, and food and beverage outlets, in Mumbai's Bandra Kurla Complex.

The project is expected to come up on a three acre land parcel in BKC, now the city's main financial district, with an estimated investment of around Rs 3,000 crore. Sources said that the gross development value from the project is around $1 billion, due to the area's location and the demand for high-quality, Grade-A offices in BKC.

Kanakia owns the land parcel, while Hines, Mitsubishi Estate, and Sumitomo will serve as the investors and development partners. The project will be designed by American architecture firm Kohn Pedersen Fox, according to a press release. Property consultants JLL served as the advisors to the deal.

"This project marks a significant milestone in our journey in India. It reflects our commitment to deepening our presence in Mumbai and highlights our strategic partnerships with MEC and Sumitomo. This project is a collaboration with Kanakia Group, a highly experienced real estate player in Mumbai, who brings significant local knowledge and expertise that we greatly value. Hines and Kanakia teams have worked on this project jointly for over a year already, and the project is progressing very well," said Amit Diwan, senior managing director and head of India, Hines.

The project is part of the Kanakia group's plan to move forward in its business with asset-light models, which has helped the company reduce its debt to under Rs 1,000 crore, the company said in a statement. Kanakia's pipeline currently includes around 8.6 million square feet of both residential and commercial assets, with a gross development value of around Rs 13,000 crore.

Market observers say that new office supply in BKC is of importance due to the shortage of high-quality offices in the area, with occupancies routinely in the high-90s in terms of percentages. Sumitomo has been a key mover in the office market in Mumbai, while others developing offices in the area include Adani Realty, Prestige Estates, and others, with entities such as the National Stock Exchange and the National Payments Corporation of India also constructing their new headquarters in the area.

Rents in the area for Grade-A offices routinely trade above Rs 500 per square foot per month, the highest in the city. Observers said that demand is expected to further increase as key infrastructure projects are completed, such as the Yellow Line of the Mumbai Metro, the completion of the third phase of the Aqua Line, the extension of the Santacruz Chembur Link Road, as well as the Mumbai-Ahmedabad high-speed railway, which will terminate at BKC.