Blackstone makes first investment in Hyderabad real estate
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Bengaluru: Blackstone Group Lp has invested Rs.470 crore in an ongoing office park project in Hyderabad’s Knowledge City, marking the global private equity fund’s first investment in the city, said two people familiar with the development, who did not want to be named.
Bengaluru-based real estate firm Salarpuria Sattva Goup has raised the capital from Blackstone to fund its project at Knowledge City, where it is building 6.5 million sq. ft of office space that is partly leased. The project is expected to be completed in 4-5 years.
The investment is pegged to boost investor interest in the property market of Hyderabad, at a time when the city is inching back to normalcy after prolonged political unrest.
Bijay Agarwal, managing director, Salarpuria Sattva Group, confirmed the transaction but did not give more details.
Blackstone declined to comment, citing company policy.
Salarpuria Sattva has a large residential and commercial office portfolio of projects in Bengaluru, Hyderabad, Coimbatore, Pune and Goa. Last year, it bought a 20-acre property in Hyderabad’s Tolichowki area from Bayer Bioscience Pvt. Ltd.
The office space sector saw steady growth in 2015 amid a prolonged slowdown in India’s residential space due to tepid demand, rise in prices and unsold inventory. Private equity funds and property developers bought office space at a brisk pace with plans to build new information technology parks and special economic zones, in sharp contrast to the freeze on residential project launches.
Investments made by Blackstone in 2015 include buying Oxygen, a special economic zone in the National Capital Region, from 3C Company for around Rs.620 crore and a commercial office project in suburban Mumbai for Rs.1,060 crore from HCC Real Estate Ltd and IL&FS Milestone Realty Advisors Pvt. Ltd.
Hyderabad, since 2009, has suffered from a prolonged economic slowdown and political unrest, leading to the formation of Telangana, which was carved out of Andhra Pradesh on 2 June 2014. The uncertainty ended when Hyderabad was named the joint capital of Telangana and Andhra Pradesh till 2024, after which the city will be completely transferred to Telangana.
Green shoots of a recovery in Hyderabad real estate market are already visible with property reports indicating better residential sales as well as good office leasing momentum.
“With the uncertainty over, both investor interest and trust are returning to Hyderabad. For a market that was depressed for a long time, it is clearly showing signs of a turnaround,” said Shashank Jain, partner, transaction services, PricewaterhouseCoopers India.