Nagabhushanam: bullish on India growth story
“Despite the challenging two-year scenario for commercial real estate due to the pandemic, India has remained a favourable investment destination for CLI. We are all set to double the size of our portfolio in the next 3-4 years, investing around Rs10,000 crore to significantly ramp up our presence in India. We continue to be bullish on the India growth story,” says Gauri Shankar Nagabhushanam, Chief Executive Officer, India Business Parks, CLI, who was appointed in March last year to lead the business parks vertical as part of company’s leadership renewal drive.
In his new role, Nagabhushanam oversees investments, development, operations, asset management, and strategic planning for CLI’s business parks in India and leads the expansion and enhancement of the Group’s portfolio of assets in the country. He was previously based in Mumbai, where, as the Head of Investments and CFO, he helped set up and scale Ascendas-Firstspace, CapitaLand’s industrial and logistics platform in India. Prior to that, he worked in Singapore, managing CLI India’s private funds business.
In India, CLI operates through three major business verticals: Business Parks; Industrial & logistics and Data Centres. Business Parks is the largest business comprising around over 75 per cent of the total size of the portfolio. The company has also forayed into serviced apartments (with seven residences) and a co-working space (one: Bridge + Bangalore).
Under the business park vertical, CLI India has 12 world class, award-winning business parks (including its flagship Bangalore International Tech Park), in Chennai, Hyderabad, Gurgaon and Pune. The company recently unveiled its upcoming project in Chennai, christened International Tech Park Chennai (ITPC), Radial Road. The project will be developed in two phases – phase I containing two blocks of 1.3 million sq ft each and will be operational by Q2 of 2023, while the two blocks of phase II are expected to be ready for operations by Q4 of 2024. The first phase of its upcoming office space project envisages an investment of Rs1,400 crore. Apart from the International Tech Park, the company also has a portfolio of business park space. These business parks together cater to 150,000 professionals from multiple sectors.
CLI’s first International Tech Park Bangalore or ITPB is one of the first IT parks in India. It is the icon of India’s IT success story, and continues its contribution to the development of Whitefield as a major IT hub in India’s Silicon Valley. Located just 18 km from the city centre, ITPB is a 69-acre integrated development with office space, retail mall, hotel and a host of other amenities.
Located in Chennai’s IT Corridor, International Tech Park Chennai – Taramani (ITPC Taramani) is a 15-acre premium IT Park offering around 2 million sq ft of premium office space. Over 40 leading IT/ITeS companies, with employees over 25,000 professionals, operate out of the park. The park comes with an added advantage of superior amenities. ITPC Taramani is also the recipient of certifications such as PEER – Gold certification by US Green Building Council and a Guinness record certification for successfully conducting a ‘Preserve and Conserve Natural Resources program’.
Apart from the existing space in CLI’s office business, around 11 million sq ft of ‘Grade A’ office space is currently at various stages of development across key IT markets, which also include existing business parks’ expansion programmes. CLI India plans to raise a Rs2,000-Rs2,500-crore India-focused fund to invest in office projects. This would be a private fund sponsored by CapitaLand with other private or institutional investors, which will invest in office projects over a period of 5-7 years.
Dasgupta: enhancing CLINT’s portfolio
According to a recently published research report by CLI, a return to office is underway as occupiers have reopened offices, alongside an uptick in hiring across ITeS and related sectors. Despite the adoption of ‘work-from-home’ or ‘work-from-anywhere’ policies to various extents by companies globally post Covid, the nature of the ITeS industry requires a substantial part of its workforce to be onsite.
CLI India has an industrial real estate platform dedicated to creating world-class logistics and industrial infrastructure across the country. Named the Ascendas-Firstspace platform, it is a joint venture between Ascendas, a member of CapitaLand Ltd, and Firstspace Realty, an Indian partner with rich experience in industrial real estate in India.
The business, launched in 2017, follows an integrated approach of investment, development and asset management while planning to build a network of logistic and industrial parks in the key strategic logistics nodes and manufacturing clusters across Mumbai, Delhi-National Capital Region (NCR), Pune, Chennai, Bengaluru, and Ahmedabad. It currently has 6 million sq ft of operational space (developed and revenue generating) with a development potential of over 20 million sq over a period of 4-5 years.
Developing logistics assets
CLI launched its second private logistics fund of Rs2,250 crore (CapitaLand India Logistics Fund II of S$400 million) in July 2021 as it aims to tap the soaring demand for warehousing. It will invest in the development of logistics assets in key warehousing and manufacturing hubs in six major cities – Ahmedabad, Bengaluru, Chennai, Mumbai, National Capital Region (NCR), and Pune, as well as in emerging markets such as Coimbatore, Guwahati, Jaipur, Kolkata and Lucknow.
The second fund follows the deployment of its first logistics fund, the S$400 million Ascendas India Logistics Programme, which was launched in 2018 to develop six projects in Bengaluru, Chennai, NCR and Pune. The six projects have a total development potential of over 12 million sq ft of space. Two of the projects are operational with 2.8 million sq ft of space that has been leased. Ascendas-Firstspace manages the assets of both funds.
“In India, we see great potential for the growth of the logistics sector. The sector continues to grow rapidly, driven by growing e-commerce and consumerism, generating strong demand for our quality warehouse and distribution facilities. With the growing penetration of e-commerce, modernisation of supply chain management and increased focus on manufacturing, we see demand for high-quality logistics and industrial space in India. We will invest in the development of logistics assets in key warehousing and manufacturing hubs. In total, CLI targets the development of a logistics portfolio of 20 to 25 million sq ft of space in India by 2025,” says Aloke Bhuniya, Ascendas-Firstspace Chief Executive Officer.
Bhuniya brings with him 17 years of experience across RE investment & development, PE and M&A transactions across industries in India. Previously, he spent over 9 years in the Everstone Group, managing various initiatives in real estate, which included IndoSpace and Everstone Capital. He was a founder partner of Firstspace.
“The Industrial & Logistics industry is evolving, and the market is witnessing increased demand due to technological advancements, shifting consumer purchasing patterns, rapid e-commerce expansion, diversified supply chains, and significant infrastructure improvements. Over the last 5 years, 3PL players have cumulatively leased more than 60 mn sq ft across India. With range-bound leasing activity in 2023, we anticipate 3PL firms will drive leasing activity as companies which look to shore up their distribution capabilities. Moreover, rental growth is likely to continue in micro-markets driven by high-quality project completions and the supply-demand imbalance,” says Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE.
Bhuniya: growth potential in logistics
CLI also has a data centre vertical, called CapitaLand Data Centre Group which is developing three data centres (total:180 megawatts) across Navi Mumbai, Hyderabad and Chennai. Besides, the company is also planning to put up one each in Noida and Bengaluru. CapitaLand India Trust (CLINT) normally invests in these data centre assets. In fact, 90 per cent of CLI India’s overall portfolio is under CLINT and three private funds.
Recently, in December 2022, CapitaLand India Trust Management Pte Ltd, the trustee-manager of CLINT signed an MoU with the Telangana Government to develop a data centre at CLINT’s International Tech Park Hyderabad (ITPH), located at Madhapur. CLINT will leverage CapitaLand Group’s data centre expertise to develop the ITPH data centre, which will have a built-up area of approximately 250,000 sq ft and 36 MW of power capacity. The project is estimated to entail an investment of around Rs1,200 crore, to be deployed in the next 3-5 years.
Besides, CLINT is investing Rs1,940 crore to develop its third data centre in India, which will come up in Ambattur, Chennai. The company is acquiring a 4.01-acre freehold site for Rs83.28 crore for the same. It will develop the state-of-the-art data centre in phases. The data centre will have a power capacity of 55 MW to host customers such as global technology giants and cloud service providers, as well as large domestic enterprise clients.
Presence in data centre markets
“With this latest acquisition, CLINT will have a presence in India’s key data centre markets, and we are also planning to develop a fourth data centre in Bengaluru. This will allow us to expand in the resilient and highly scalable data centre asset class, diversify our data centre portfolio geographically, and enable us to better serve our customers across the country. India’s data consumption and demand for information technology (IT) solutions are fast expanding but the country has one of the world’s lowest data centre densities. Our data centres will further enhance the quality of CLINT’s portfolio and deliver sustainable returns to unit holders,” says Sanjeev Dasgupta, Chief Executive Officer, CLINT who has around 24 years of experience in the areas of real estate fund management, corporate finance, strategy and financial control. Prior to joining CLI, he was working as President of Real Estate at ICICI Venture Funds Mgmt Co Ltd.
Earlier, in May 2022, the trustee-manager of CLINT entered into a forward purchase agreement with the Casa Grande Group to acquire two industrial assets located at Mahindra World City, Chennai. CLINT will also provide funding for the development of the Phase 2 Project as part of the forward purchase arrangement.
In November 2022, L&T Realty, the Real Estate Development arm of L&T and trustee-manager of CLINT entered into a non-binding term sheet for a commercial platform to develop close to 6 mn sq ft of prime office spaces across Bengaluru, Chennai and Mumbai. Under this platform, L&T will build and develop office spaces, while CLINT will market the office spaces. Depending on the completion of these developments, CLINT expects the majority of the capital commitment for the projects to start from 2H 2024 onwards. CLINT will acquire the ownership of these properties in a phased manner.
International Tech Park Chennai
In January this year, CLINT entered into a forward purchase agreement to acquire a 1 million sq ft IT Park located at Outer Ring Road, Bengaluru. Upon completion, the transaction will increase CLINT’s area under operation in Bengaluru from 6.9 million sq ft to 7.9 million sq ft. The Project complements CLINT’s existing portfolio in Whitefield (International Tech Park Bangalore) and Hebbal (Gardencity) to offer tenants options across micro-markets and leverages its deep market knowledge and occupier relationships in Bengaluru.
As of 31 December 2022, CLINT’s assets under management stand at S$2.5 billion. CLINT’s portfolio includes eight world-class IT business parks, one logistics park, one industrial facility and three data centre developments in India, with total completed floor area of 15.5 mn sq ft spread across Bengaluru, Chennai, Hyderabad, Pune and Mumbai. CLINT, which is a wholly-owned subsidiary of CLI, is focused on capitalising on the fast-growing IT industry and logistics/industrial asset classes in India, as well as proactively diversifying into other new economy asset class such as data centres. CLINT is structured as a business trust, offering stable income distributions similar to a real estate investment trust. CLINT focuses on enhancing shareholder value by actively managing existing properties, developing vacant land in its portfolio, and acquiring new properties.
In FY22 (ended December 2022), CLINT’s total property income increased by 12 per cent to Rs1,190 crore, while net property income increased by 10 per cent to Rs940 crore. The DPU increased by 8 per cent to Rs4.64 during the period. CLINT achieved a committed portfolio occupancy of 92 pe cent as of 31 December 2022.
“We diversified our portfolio with the acquisition of our seventh warehouse and first industrial facility in 2022. In the fourth quarter ended 31 December 2022, we announced plans to develop two more data centres in Hyderabad and Chennai in addition to Mumbai and Bengaluru. We now have a DC platform in prime locations across India’s four large DC markets. We also look forward to the completion of the acquisition of International Tech Park Pune – Hinjawadi. This is a fully leased asset which will generate and boost stable returns for our unit holders. We believe the acquisitions made and announced during the year will position CLINT for further growth in 2023,” says Dasgupta, CLINT CEO.
Meanwhile, Singapore-headquartered parent CapitaLand Investment Ltd or CLI has posted an Operating PATMI (Operating PATMI refers to profit from business operations excluding any gains or losses from divestments, revaluations, and impairments) of S$609 million for FY22, 23 per cent higher than the S$497 million a year ago. CLI’s revenue for FY22 increased 25 per cent year-on-year to S$2,876 million, boosted by higher contributions from fee income-related businesses and real estate investment business. Fee Income-related revenue grew 6 per cent to S$955 million, supported by higher fee-related earnings from private funds and lodging management.
The company is betting big on the warehousing business in the country
Sustainability is at the core of CLI’s business. In May 2022, CLI elevated its commitment to sustainability by pledging to achieve net zero emissions by 2050, which builds on existing sustainability targets outlined in CapitaLand’s 2030 Sustainability Master Plan unveiled in October 2020. This includes accelerating the transition to a low-carbon business, improving water conservation and resilience, and enabling a circular economy.
In India, CLI Business Parks currently have 39 green buildings within their properties. CLI has adopted various measures to reduce its carbon footprint. As part of its digital initiatives, the company has also set up an Internet of Things-driven intelligent building platform that improves energy efficiency in its properties through real-time data analysis and performance monitoring.
“Sustainability is a core tenet of CapitaLand Investment’s business, and we integrate it into every stage of our real estate life cycle, from investment to design, development and operations. Our net zero commitment in India augments CLI’s commitment to achieving net zero emissions by 2050. We will strive for our assets to be net zero-certified and advance the net zero movement in the real estate industry in India,” says Nagabhushanam.
With all these developments in place, the CapitaLand group is betting big on the rapidly-growing Indian RE market. Over the last few years, CLI which pioneered International IT Parks in the country, setting up the first such park way back in 1994, has developed expertise across the full real estate value chain. Reiterating its faith in the India growth story, the company is now planning to further expand its operations in the country by investing Rs10,000 crore, which will double its portfolio in the next 3-4 years.
Apart from traditional investments in business parks, CLI is now also closely looking at other emerging asset classes like data centres as also industrial & logistics. This will not only help scale up its portfolio but also provide the much-needed diversity to effectively face any market vagaries.
• CLI India, previously known as Ascendas India, is part of Singapore headquartered and listed CapitaLand Investment Ltd, a leading global real estate investment manager with S$132 billion of real estate assets under management and S$88 billion of real estate funds under management
• In July 2019, the real estate giant, CapitaLand Ltd completed its $11 billion acquisition of Ascendas-Singbridge from Temasek Holdings to form one of Asia’s largest diversified real estate groups, CaptaLand Group. This saw Ascendas India becoming CapitaLand Investment India or CLI India.
• CLI India, having over 28 years of experience in India and pioneered IT parks in the country, has built a portfolio of over 20 business and IT parks, industrial, logistics, data centres and lodging properties across key Indian cities.
• CapitaLand Group plans to double its portfolio in the Indian market in the next 3-4 years to 40-50 million sq ft, where 80 per cent would be business parks.
• The company is looking to invest to the tune of Rs10,000 crore across data centers, office spaces and logistics. This will double its combined AUM to around S$8 billion.
• CLI has an India-foused RE trust, CapitaLand India Trust or CLINT (formerly called Ascendas India Trust). Ninety per cent of CLI India’s portfolio is under this listed trust and three private funds.