Singapore-based CapitaLand Investment Ltd is planning to deploy around Rs 4,500 crore over the next 6 to 7 years to expand its footprint into business parks and industrial logistics parks in India.
The company plans to foray into tier-2 cities like Lucknow, Coimbatore, Guwahati, Bhubaneswar and Kolkata. It is also looking to enter new business segments like renewable energy and credit financing, Gauri Shankar Nagabhushanam, chief executive officer at India Business Parks, CapitaLand, told Moneycontrol.
Investment plans
"The capital will keep getting invested as we keep on getting opportunities. Currently, Rs 4,500 crore investment is something we are looking at, of which half is committed and half will come up. If we talk about the deployment of Rs 4,500 crore, I would say that may happen in the coming 6 to 7 years. This will be an overall investment but largely this will be for business and industrial logistics parks," Nagabhushanam added.
Company to double portfolio
According to the company, its current portfolio is 21 million square feet completed in business parks, followed by warehousing and 6 million sqft is developed and leased.
"In the case of data centres, nothing is yet leased. We are currently developing on the business park side and are currently constructing 11 million sqft, which will be completed in the next 3 years. We will be acquiring and developing more in addition to the above numbers," he added.
"Most of the development we did in India is greenfield and we are aiming at above 40 million sqft for business parks. We are also looking at opportunities for industrial logistic parks, and hence hitting 50 million sqft development does not look like a challenge.”
CapitaLand has close to 30 years of experience in India and is one of the business park pioneers in the country. It has a strong portfolio of more than 30 properties across 7 cities, with total assets under management of Rs 24,700 crore (S$4 million). Its resilient and well-diversified portfolio in India includes business parks, industrial, logistics, lodging and data centre assets.
Tier-2 cities on the radar
According to the company, after having a presence in six major cities including Mumbai, Pune, Delhi NCR, Hyderabad, Bengaluru and Chennai, it now plans to foray into tier-2 cities.
"The attractive market right now is Lucknow, where a lot of e-commerce players are going. Guwahati is another attractive market followed by Coimbatore, etc. So we are looking at new markets but despite this, 80 percent of our business will be from six major or bigger cities. Out of this, the bulk of it for warehousing will be from Mumbai. Delhi NCR and Mumbai are going to be the key focus," Nagabhushanam mentioned.
New segments
CapitaLand is looking at new segments to expand its business in India.
He said, "We are looking at alternate assets. Right now we are looking at a couple of opportunities or rather say studying, of which one is renewable energy and the second is credit market space wherein say something like real estate funding. These are very preliminary, I do not think this is something we are actively pursuing but generally want to look at it. In the case of renewables, I would say the focus might be solar and wind. However, the wind side is more challenging."
Challenges in leasing spaces?
The company on May 16 announced it has received leasing commitments from global corporations for 80 percent of phase 1 of its International Tech Park Pune (ITPP), Kharadi, spread over 1.5 million sq ft, and the operations have commenced.
The commitments received include those from global corporations such as 315 Work Avenue, Acuity Knowledge Partners, Bharti Airtel, Deloitte, Hewlett Packard Enterprise, NielsenIQ, PTEC Technology Solutions, SAP Labs, Sulzer, Tablespace, Whirlpool India and ZS Associates.
Asked whether CapitaLand faced any problems or challenges in finding the right companies for leasing space in the tech park, the company said the right product at the right time helped it get companies onboard without any major challenges.
Also read: CapitaLand India Trust to buy 1mn sqft IT park in Bengaluru for Rs 1,226 crore
"In Pune, I would say it was a bit of luck and a bit of our product worked in our favour. The product we offer in Kharadi is very unique and significantly different from what is available in that market. I think we further got tailwinds from 2020 and 2021 when there was literally no uptake. So 2022 was a bumper year for the office segment in India, and we benefited significantly. The product was available just when the market was seeing demand. Even the first quarter of 2023 has been decent, and I am keeping my fingers crossed for the rest of the year. The banking crisis in the West is also looking settled and amid this 2024 is also looking bright," said Nagabhushanam.
Will look into Cognizant's portfolio sale
Recently, IT major Cognizant announced it will give up 80,000 seats, or 11 million sqft in office space primarily in large Indian cities as it looks to reduce its annual real estate costs by $100 million. The company said it was aiming to rationalise workspaces as it realigned office spaces in a post-pandemic hybrid work environment.
Also read: L&T Realty, CapitaLand India Trust to develop 6 million square feet of office spaces
CapitaLand said it will be interested in Cognizant’s sale. Nagabhushanam said, "We are definitely interested. Whenever there is an opportunity we look into it. Whenever Cognizant will bring it up for sale, we will participate in that process for purchase. There is no focus or investment for that we have planned yet but it depends on the opportunity that comes up."
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