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Brexit could delay half of central London commercial property developments: Savills

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Brexit could delay half of central London commercial property developments: Savills

Commercial property was one of the first sectors to be hit in the immediate aftermath of the June 23 public vote to leave the European Union, with investors pulling cash out of funds and forcing many to be temporarily suspended.

 LONDON: Up to half of planned commercial developments in central London could be delayed over the next few years due to concerns about Brexit, and overall investor returns will be flat in 2016, estate agents Savills said on Tuesday.

Commercial property was one of the first sectors to be hit in the immediate aftermath of the June 23 public vote to leave the European Union, with investors pulling cash out of funds and forcing many to be temporarily suspended.

Savills said that across Britain there could be a decline of up to 40 percent from 2017 until 2021 in development activity of retail, office and industrial property, with up to 50 percent delayed in central London.

“This would definitely be Brexit-related – a mix of lender, developer and occupier risk-aversion,” Head of Commercial Research Mat Oakley told Reuters.

Returns for investors, primarily made up of the rents they receive and the growth in the value of the asset, will rise by just 0.4 percent this year, compared to an increase of 13.2 percent in 2015, Savills said.

There would be a slow recovery over the next few years with returns increasing by 1.4 percent next year, 5.3 percent in 2018 and 7.8 percent by 2021, it added.

“We were forecasting a declining total return more than a year ago, but Brexit has resulted in a sharper than expected correction in capital values,” said Oakley.

Demand for luxury homes in central London, where a high proportion of buyers are foreign and domestic investors, has also been hit in recent months due to increased property taxation and the uncertainty created by Brexit.

Consultancy Knight Frank said on Tuesday that a 4.8 percent fall in prime central London house prices in November was the steepest drop in just over seven years.

Prices in the capital’s most desirable postcodes, ranging from Knightsbridge and Belgravia to Notting Hill, have recorded ever-increasing annual falls in recent months with prices expected to be flat next year.

But Savills said the global uncertainty created by events such as Brexit, Donald Trump’s impending U.S. presidency and upcoming European elections could push investors towards safe buys in London, with its stable legal system and relative transparency.

It said the roughly 15 percent depreciation in the value of the pound against both the dollar and the euro since June has given an effective discount to many foreign buyers, which could buoy sales in central London into next year.

Source: ET Realty

Commercial

Blackstone In Process To Buy L&T’s Commercial Property Portfolio For Rs. 2300 Crores

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Blackstone In Process To Buy L&T’s Commercial Property

Being one of the world’s leading investment firms, Blackstone has emerged as the most aggressive institutional investor in India’s real estate sector. Now this US-based private equity player is in advanced talks with L&T Realty, to acquire two commercial properties covering a total of 1.7 million sq ft., in a deal valued at Rs. 2,300 crores. Blackstone leads the market with its highest

Blackstone has been picking up properties across major cities in deals that are turning out to be benchmarks in the sector. Owning the India’s biggest portfolio of income producing office assets, this company holds a total of over 31 million sq ft. across key property markets of Noida, Mumbai, Pune and Bengaluru.

This portfolio of the real estate arm of engineering major Larsen & Toubro includes a 9 lakh sq ft. office block at the company’s commercial project at Seawoods, in Navi Mumbai. And there is another 8 lakh sq ft. of fully-leased commercial tower at the L&T premise in Powai suburb. This Seawoods office tower will be acquired in phases as the leasing process is yet to complete.

L&T Realty will assist in further leasing at Seawoods commercial block, as the deal is expected to be inked by late February as the process is currently in its final stages. Earlier in 2016, Blackstone made a deal in Navi Mumbai, a 1-million sq ft. retail mall was bought adjacent to the office tower in Seawoods, from L&T Realty for over Rs. 1,400 crores.

Being the part of the India’s largest Transit Oriented Development, Seawoods Grand Central, is L&T Realty’s office block in Navi Mumbai. This project is a mixed-use development area across 40 acres that includes the mall and other commercial spaces.

Blackstone is said to be directly acquiring these assets, without including its existing joint ventures with Bengaluru-based Embassy Group and Pune’s Panchshil Realty. This is not the first time that the New York based institutional investor has acquired assets and stake in portfolios independently.

With Colgate-Palmolive, JP Morgan Chase and L&T Infotech as the prime tenants, the commercial tower in Powai is completely leased out. This leasing factor together with all the long-term contracts, makes the Powai asset valued at Rs. 1,500 crores with a capitalization rate of about 8.5%.

Establishing its first Indian office in 2005, the leading private equity player has committed over $6 billion to the Indian companies till date. Total 19 companies owning 31 million sq ft. across 18 operating office parks, with an investment of $2.7 billion, comes under Blackstone.

An additional 11 million sq ft. of commercial space under development across the country, adds to this large portfolio. Over the past few years, the Indian real estate assets have been seeing aggressive pattern of investments, by the major global institutional investors such as Blackstone Group, GIC, Goldman Sachs, Qatar Investment Authority, Canada Pension Plan Investment Board and Brookfield Asset Management.

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Indiabulls Real Estate Acquires A Commercial Building With Leasable Area Of 2.5 Lakh Sq Ft. In Gurgaon

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Indiabulls Real Estate

Indiabulls Real Estate has earned a distinct reputation for building projects that turn spaces into inspiring places, since its inception. Indiabulls Real Estate went on to expand its projects portfolio, with its prime focus on construction and development of residential, commercial & SEZ projects, across major Indian Metro cities. Today Indiabulls Real Estate is ranked amongst the top Real Estate companies with a total Gross Development value of INR 32,189 crores and net worth of INR 5,480 crores as of 2017.

Indiabulls Real Estate has commercial development with a leasable area of 3.15 million sq.ft. under construction. Further, it has a land bank of 1,046 acres and also possesses 2,588 acres of SEZ land at Nasik, Maharashtra. In 2014, the company acquired the prime property, 22 Hanover Square in Central London for Rs.1630 Cr. The group has also been conferred the status of a Business Super brand by the brand council Superbrands, India. Indiabulls Real Estate is known for its successful delivering of superior products, services to its customers, partners and shareholders.

Indiabulls Real Estate is planning to acquire a large commercial building with a leasable area of 2.5 lakh sq ft in Gurgaon.

To acquire this large area of prime and newly constructed commercial building, Indiabulls Real Estate’s wholly-owned subsidiary has entered into a definitive and a binding agreement. A BSE filing by the Indiabulls reveals that, the deal has an expectancy period of four months, mainly after receiving the Occupation Certificate of the building. Although the name of the seller and deal value was not disclosed.

With many leading multi-nationals operating in the vicinity, makes it a developed prime commercial location. Equipped with an additional leasable area, the company expects to enhance its annuity revenue to Rs 1,450 crore in FY 20-21 from the rental properties portfolio of Indiabulls Real Estate.

With its expansion spree, Indiabulls Real Estate, is counting on the revival in the real estate market in Gurgaon for making its project a success. The commercial realty market is witnessing a strong demand in Gurgaon. So Indiabulls Real Estate is looking forward to set up a state of the art business park in Gurgaon, which would be able to draw reputed corporates and MNCs. As some big-ticket commercial space rentals and deals are expected to be finalized in this space.

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Commercial

Adani’s Bandra-Kurla Complex Project To Be Taken Over By Shapoorji Arm For Rs 2,000 Crore

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Adani’s Bandra-Kurla Complex Project To Be Taken Over By Shapoorji Arm

Shapoorji Pallonji Investment Advisors which is an investment arm of conglomerate Shapoorji Pallonji Group is set to acquire a commercial project Inspire BKC from Adani Realty in a nearly Rs. 2,000-crore transaction. The project is located in Mumbai’s business district Bandra-Kurla Complex (BKC), informed two persons familiar with the development.

Shapoorji Pallonji Investment Advisors has emerged as the frontrunner from a total seven shortlisted interested entities including US-based private equity major Blackstone Group and an alliance between Qatar Investment Advisors (QIA) and Bengaluru based realty developer RMZ.  For this over 8 lakh sq ft project Shapoorji Pallonji Investment Advisors has already completed the due diligence process.

One of the people mentioned above said, “The due diligence process for the asset has been concluded recently, and currently the final documentation is going on. The deal is expected to be concluded soon as both the parties have frozen the structure of the transaction.”

The project has recently been completed and the developer is in the process of receiving few civic approvals, following which it will be concluded. Adani Realty is also one of the companies that is working on closing few leasing transactions here.

In one such lease deals, Swiss multinational pharmaceutical major Novartis’ India arm has entered into an agreement to pick up over 1lakh sq ft office space in this commercial project. This was one of the largest front office commercial transactions in terms of space in the Mumbai in 2017.

Shapoorji Pallonji Investment Advisor is also kept in the loop on the progress of space leasing transactions in this commercial project.

In its first-ever real estate related engagement in India in October the global insurance and asset management major Allianz Group teamed up with Shapoorji Pallonji Group to create an investment platform for office properties.

The platform, SPREF II, will be a Singapore-domiciled, rupee-denominated and close-ended fund planning to raise $500 million in equity.

After partnering with the Canada Pension Plan Investment Board (CPPIB) in 2013 for a platform with an initial target corpus of $200 million this is Shapoorji Pallonji Investment Advisors’ second such tie-up.

The commercial real estate has been registering a healthy growth across prime office markets in past three years.

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