Mumbai: Canada’s Brookfield Asset Management Inc. is in final stages of discussions with private sector lender ICICI Bank Ltd to acquire the ICICI Tower in Hyderabad, two people aware of the development said.
Brookfield is on the verge of signing the deal for the property situated in Gachibowli financial district, said one of the two persons on the condition of anonymity.
“Brookfield has completed the due diligence and some of the transfer procedures are pending. The deal may be signed in a couple of weeks’ time," said the second person. The 1.2 million sq. ft building is valued at around Rs1,000-1,200 crore, according to the second person.
Brookfield, which owns $250 billion of assets worldwide, has been on an expansion spree in India with multiple buyouts in the recent past.
In January, it agreed to acquire the 1.25 million sq. ft Equinox Business Park at Bandra-Kurla Complex (BKC) in Mumbai from Essar Group for about Rs2,400 crore. In 2016, it had signed one of India’s largest commercial real estate deals by acquiring the office and retail assets of Hiranandani Developers Pvt. Ltd for close to $1 billion.
Mails sent to spokespersons at ICICI Bank and Brookfield went unanswered.
Hyderabad turns out to be a much sought-after office space for several global multinational companies after Bengaluru and Chennai.
Apple Inc. had entered Hyderabad in 2016 by leasing 2.5 lakh sq. ft, while others like Amazon.com Inc. and Microsoft Corp. have leased large office spaces in the city.
According to data compiled by property advisor JLL India, Hyderabad, which saw a rental growth of 6.8% in 2017, is likely to touch the 2008 peak in the coming quarters.
“Hyderabad today is one of the fastest growing markets and is in a catch-up mode on the pace of both construction as well as leasing, for the last few quarters after the political stability achieved from the split (in two states)," said Shashank Jain, partner and leader (real estate deals) at PwC India.
While there have been some headwinds for the IT/ITES sector in the recent times, it has not yet adversely impacted the demand for office space in India, he added.
Grade A supply in Hyderabad office space totaling around 5.8 million sq. ft was recorded during 2017, an increase of 47.0% compared to 2016, according to the Cushman & Wakefield December 2017 report.
“Owing to the limited availability of Grade A space expected in the first half of 2018, rentals are anticipated to rise steadily in the Madhapur and Gachibowli submarkets. We expect that strong demand and tight vacancy rates will tilt the market in favour of landlords for the next few quarters," it added.
Several investors are set to exit from their investments in Hyderabad against the backdrop of increasing demand.
Another Hyderabad-based office property WaveRock, spread over 2.5 million sq. ft in the Gachibowli financial district, has been put on the block by its investors Singapore’s sovereign wealth fund GIC Pte. Ltd and New York-based developer Tishman Speyer, Mint reported in January.
In 2017, the office sector witnessed a massive jump in investments to Rs13,200 crore from Rs4,000 crore in 2016, according to a Cushman and Wakefield January 2018 report. The jump in inflows came on the back of a three-fold rise in investment in office segment, signalling heightened interest of institutional investors in pre-leased office assets.