Max Estates, the wholly owned subsidiary of Max Ventures and Industries, has formed a 51:49 joint venture with New York Life Insurance, the largest mutual life Insurance company in the United States, to develop a commercial real estate project in Noida.
The Rs 400 crore project, with a built-up area of 700,000 square feet, will be the second investment of New York Life Insurance in Max Ventures and Industries in the past two years. In 2017, it had invested nearly Rs 250 crore in a combination of preference and right issues of Max Ventures and picked up nearly 23% stake.
“This would be the third commercial project of Max Estates. We aim to scale up to among the top three commercial real estate developers in the region within the next three years,” said Sahil Vachani, managing director, Max Ventures and Industries.
“Our business model going further is to develop the commercial projects in the partnership with such large foreign funds. Companies are preferring developer owned office to lease vs strata sold ones so we will own the assets and give them on long term leases,” he said.
Strata sold buildings are the ones which are pre-sold to investors in parts who then further lease them out to companies.
“Max Ventures will have continued stream of income from these projects. It will have project management fee during the construction phase of these projects and asset management fee after the completion of the projects,” said Vachani.
The company is also looking at acquiring some distressed assets that are coming up for resolution under the Insolvency and Bankruptcy Code.
Max Estates has already developed the 600,000 sq ft Max Tower in Noida and is set to complete a second project of 300,000 sq ft, Max House, in the next quarter.
New York Life had partnered with Max Group to form Max New York Life Insurance Company Limited with 26% ownership. The American insurance behemoth sold its stake to Mitsui Sumitomo Insurance Company Limited of Japan in 2012.
According to Colliers International, a Canada-based global commercial real estate services organisation, leasing activity continued its strong momentum in 2019 across seven major cities in India with gross absorption at a new high of 58.6 million sq ft, 17% higher than in 2018.
Source: Economic Times