Mumbai: Bullish on the rising demand for commercial real estate, Mumbai-based developer K Raheja Corp. is planning to invest around ₹ 2,000 crore in acquiring land and building 6 million sq. ft of commercial space in the next two-and-a-half years in Navi Mumbai.
The company currently operates three information technology (IT) parks in Navi Mumbai under the brand Mindspace. These parks house over 50 multinational companies, including major IT firms such as Accenture, L&T Infotech Ltd, Cognizant Technology Solutions Corp. and Capegemini Group. All three parks are in various stages of development.
Vinod Rohira, managing director and chief executive officer (commercial real estate and REIT), K Raheja Corp, said the company is looking to expand its commercial business within the Navi Mumbai region, where an additional 6 million sq. ft of commercial space is being planned for development. This would also include a fourth IT park, which it is looking to start building in the next six-to-nine months.
The fourth park is being planned on a 30-acre land parcel at Ghansoli (within the Navi Mumbai region), which it bought from US-based specialty chemicals company Cabot Corporation for ₹ 210 crore last year.
In the March quarter of the last financial year, K Raheja also bought JPMorgan’s 49% stake in the Airoli-Gigalex commercial project in Navi Mumbai for around ₹ 2,400 crore. After the buyout, K Raheja fully owns the project spread across 4.5 million sq. ft of land area, of which 1.5 million sq. ft has already been built.
Rohira said all four parks are ongoing projects that offer the potential to develop over 20 million sq. ft of commercial real estate in the next six to seven years, of which six million sq. ft will come up within the next three years. Four new commercial buildings are currently being built within the area, he added.
“A lot of supply in the speculative form is coming into these regions (Pune and Navi Mumbai). With Navi Mumbai, we want to bring in volumes by making the market supply-driven. We want to create quality offerings at economical rates, bringing in the best IT companies," Rohira said. At present, the company leases its commercial office space for ₹ 50 per sq. ft. This is one of the lowest rates in Mumbai where rentals range between ₹ 250 and ₹ 350 per sq. ft in upcoming financial hubs like the Bandra Kurla Complex (BKC) in the city.
He, however, declined to say how much the company plans to invest in order to execute these projects.
According to two other people who are aware of the development, the company has set aside a budget of ₹ 1,800 to ₹ 2,000 crore for the next two-and-a-half years to expand its commercial real estate in Navi Mumbai.
Most of the investment would be funded through internal accruals and rentals generated from its current commercial projects, said a company official on condition on anonymity.
The second person who works closely with the company said the amount would be spent both in acquiring land around Navi Mumbai and on building its ongoing commercial projects within the region.
At present, K Raheja Corp operates and leases a total of around 20 million commercial spaces across Mumbai, Navi Mumbai, Hyderabad and Pune.
According to Shashank Jain, partner (transaction services), PwC India, a research consultant firm, a lot of old industrial houses have moved out of expensive corporate offices in Mumbai.
“The trend started 10 years back with people moving from South Mumbai to BKC, and then to Powai. Now, we are seeing people moving to Thane or even slightly on the edge, towards the eastern side like Vashi or Airoli (suburbs of Mumbai). It’s a trend linked to urbanization and with real estate prices going up, companies that do not have the requirement of customers or clients walking into their offices, are moving to such places," Jain said.
He said the need for large office spaces is forcing many IT firms to look upcoming areas in the suburbs.
In a press release issued on Monday by property consultant JLL, K Raheja Corp. said it had partnered with Gera Development, a local builder, to develop and operate a prime 30-acre land parcel at Kharadi in Pune. JLL India has facilitated the deal.
The land parcel will be developed into an IT Special Economic Zone under the Gera Commerzone banner, and will yield 3.5 million sq. ft of leasable space. The company runs most of its commercial projects under the brand name Mindspace and Commerzone.
“Infrastructure wise, we are seeing Bengaluru choking out which is creating opportunities for newer markets. Corporates seeking efficient workspaces would definitely look at these markets (Pune and Navi Mumbai), which are poised to become game changers, thanks to the social infrastructure, abundant housing, public transport systems, excellent road and rail connectivity, and the second international airport within Navi Mumbai," Rohira said.