Bengaluru: Singapore-based Ascendas-Singbridge Group is looking to acquire operational office assets and buy land to develop greenfield office projects in India, in a bid to expand its project portfolio and add to its Singapore-listed real estate investment trust (REIT).
The group is also in the process of building 11 million sq. ft of commercial office space across cities over the next few years, which will add to its 10 million sq. ft of operational assets valued at about Rs.8,900 crore.
The expansion, both through acquisitions and development of new projects, will be funded through two India-specific funds—Ascendas India Trust (a-iTrust), a listed vehicle for stabilized, income-producing commercial properties; and Ascendas India Growth Programme (AIGP), which was launched with the GIC Pte Ltd, Singapore’s sovereign wealth fund, as a principal investor.
Ascendas uses its balance sheet capital to be an investor in these funds and to also directly invest in development projects.
In a departure from its fairly conservative strategy in India over the last two decades or so, and under its newly appointed chief executive for India operations, Ascendas-Singbridge Group is now looking to bulk up its project portfolio in the country, add Mumbai as a potential development location and tap opportunities in the office sector, which has fared much better than its residential counterpart in the last few years.
“We want to grow through the acquisition route by buying out both ready assets and those nearing completion,” said Sanjay Dutt, chief executive, India operations, Ascendas-Singbridge India, the local arm of Ascendas-Singbridge Group.
“We are also looking to buy land, enter into joint ventures and joint development partnerships to develop projects. The main objective is to expand our REIT portfolio and shareholder value,” he said.
Dutt, who was managing director at property advisory Cushman and Wakefield India, joined Ascendas-Singbridge in August.
In India, Ascendas-Singbridge has a portfolio of eight information (IT) parks across Bengaluru, Chennai, Hyderabad, Pune and Gurgaon and OneHub Chennai, an integrated industrial park in Tamil Nadu.
Ascendas-Singbridge is also looking at opportunities in the warehousing and logistics space, and industrial parks and townships.
In 2015, Ascendas Pte. Ltd and Singbridge Pte. Ltd announced the completion of their merger to form the Ascendas-Singbridge Group.
In the last 3-4 years, when the residential sector witnessed a sharp slowdown in home sales and rise in unsold inventory, the commercial office sector emerged as a relatively bright spot.
Steady lease rentals, high absorption levels, inadequate supply and global investor interest are some of the factors that played a critical role.
“Just like residential, the office segment has also seen some consolidation, with a few large developers becoming stronger. It’s a good time for us to look at opportunities because we have the required funding and the development expertise,” Dutt said.
Almost all the top office developers, backed by investors with deep pockets, are currently in an acquisition-and-expansion mode, including Blackstone Group Lp-funded Panchshil Realty and Embassy Group and Qatar Investment Authority backed-RMZ Corp.
DLF Ltd is in the process of selling a 40% stake in its rental assets arm to raise about $2 billion and Brookfield Asset Management Inc. is close to investing $1 billion in buying out the office and retail assets of Hiranandani Developers Pvt. Ltd in suburban Mumbai.
“Office space is a stable, income-generating asset class for both investors and developers and unlike residential, is not driven by speculation but by end-user demand. While many mature properties are already owned by institutional investors, greenfield opportunities are more in the current market scenario,” said Viral Desai, national director-office at property advisory Knight Frank India.
