Singapore’s CapitaLand aims to double its India funds under management by 2028

Mumbai: Lured by India's fast-growing economy, Singapore-based CapitaLand Investment is looking to more than double its $5.7 billion in funds under management here over the next four years.

The growth will be driven by investments in data centres, renewable energy and private credit for real estate, in addition to existing business park, industrial and logistics, and hospitality assets, top executives of CapitaLand told Mint in an interview.

While the fund is bullish on India, some concerns over taxation, capital repatriation and currency volatility continue to bug overseas investors, the executives said.

When CapitaLand acquired Ascendas from Temasek in 2019, the India business was about 3.5% of the Singaporean investor's total asset base. Today, that has gone up to 7%. Investments in India are likely to go past 10% of the total funds under management for CapitaLand by 2028, according to Andrew Lim, the fund’s group chief operating officer.

Also Read: Singapore’s CapitaLand Investment to invest over ₹90,200 crore in India by 2028

The real estate investment manager also wants to tap the booming local capital markets in India and is evaluating several options for this, Sanjeev Dasgupta, the chief executive of CapitaLand Investment India, said. One option would be to park its renewable energy assets into an Infrastructure Investment Trust (InvIT) when they become operational, he said.

Ascendas pioneered the concept of business parks in India three decades ago with an IT park at Whitefield in Bengaluru, the executives said. Even today, CapitaLand derives around 90% of value in India through such parks. However, it surrendered its early lead to peers like Blackstone and Brookfield that have emerged among the largest landlords in the country.

“When people like Blackstone and Brookfield came in, they brought the big cheques. At that time, we (Ascendas) did not have big cheques. We were a developer, and we were building from the ground-up,” said Manohar Khiatani, senior executive director, CapitaLand Investment.

Also Read: Al Gore firm, CapitaLand eye Radiance acquisition

Now, CapitaLand wants to close this gap with its peers through organic and inorganic growth opportunities, he said.

To be sure, Brookfield has similar plans of doubling its bet on Indian real estate sector over the coming five years with investments of $10 billion, as per news reports.

23.5 mn square feet of real estate in India

CapitaLand has about 23.5 million square feet of real estate across 14 business and IT parks in India. About 16 million square feet are in the pipeline, according to Dasgupta.

Similarly, it has about 9.1 million square feet of logistics and industrial parks, with another 14 million square feet in the pipeline, he said.

However, a large part of the growth in the next four years will come from the fast-growing data centre and renewable energy businesses, he said.

CapitaLand has four under-construction data centres in India across Navi Mumbai, Bengaluru, Hyderabad and Chennai with about 244-gigawatt capacity. It is betting on getting business from hyperscalers, who would prefer its newer architecture data centres over existing infrastructure, according to Dasgupta.

Also Read: The headaches of India’s largest office landlord

As an adjacency to these power-guzzling data centres, the company is looking at entering the renewable energy sector. Sticking with its core expertise of developing and running an asset efficiently, the fund will be operating its own assets instead of contracting third-party experts, he said.

The investment firm is also keen on lending funds to real estate developers in India. Local regulations have made it difficult for banks to lend capital to developers for purchasing land parcels or for projects pending regulatory approvals. Meanwhile, the local bankruptcy laws have improved as well, further making the case for CapitaLand to enter this business, according to Dasgupta.

While India remains an attractive investment destination for global capital, Lim said that some concerns remain around high taxation, limitations on repatriation of capital overseas and currency volatility.

“Investors want to understand how to price India. That’s the question everyone is asking themselves. ‘What is the realistic return requirement we can assign to India today,’” Lim said.