Piramal Realty invests Rs2,400 crore in first commercial project
Piramal Realty, the real estate division of Ajay Piramal-controlled Piramal Enterprises Ltd, is investing Rs2,400 crore in its first commercial project, a 16-acre corporate park coming up at Kurla in Mumbai, a top company executive said.
The Agastya Corporate Park will be built in two phases and have a total saleable area of around 1.9 million sq. ft. The company has completed construction of the first phase which comprises of three buildings with 800,000 sq. ft of saleable area. The entire project is expected to be completed in the next three years.
In an interview, Anand Piramal, executive director of Piramal Enterprises, said the firm expects to earn a total revenue of Rs5,300 crore from the project through a combination of lease and sale model. Around 30% of the total revenue of Piramal Realty would come from its commercial real estate business, he said.
In October, Piramal Enterprises bought out 176,000 sq. ft carpet area for Rs438 crore to set up its new office. As part of plans to consolidate its operation spread across Mumbai, as many as 800 employees of the group would move in to the new complex in the next few days.
“The total investment of Rs2,400 crore on the project comprises both land and project execution cost. We have already designed the second phase of the project. We intend to build it in the next three years,” said Piramal.
The investment would be funded primarily through capital that it received separately from two global private equity firms Warburg Pincus and Goldman Sachs in 2015. The firms invested a total of $434 million in Piramal Realty by picking up minority stakes in the company.
The company is also looking to buy land in Mumbai Metropolitan Region (MMR) to expand its commercial real estate business.
“Demand for commercial real estate is picking up. We are looking at good land parcels. Currently, we have got two great investors—Warburg Pincus and Goldman Sachs and we have the capital to take on commercial projects. However, we are always ready for more partnerships but at the right value and similar aspirations,” Piramal said.
According to the latest Office MarketView report by property consultant CBRE, leasing activity for prime office space across key cities continues to remain strong with absorption crossing 10 million sq. ft during the April- June period. On a sequential basis, office absorption increased by 28% in the second quarter of the calendar year.
Earlier this year, Piramal Realty said it would invest about Rs1,800 crore on its residential project in Mulund suburb of Mumbai. Founded in 2012, the company has around 12 million sq. ft of commercial and residential projects under development in Bandra Kurla Complex, Kurla, Mulund, Thane and Worli in Mumbai.