Keppel Acquires One Paramount 1 Tech Park in Chennai for Rs 2,100 Crore
Keppel, a Singapore-based global asset manager and operator, has recently acquired One Paramount 1 tech park in Chennai for approximately Rs 2,100 crore. This prime office asset is jointly owned by realty developer RMZ Corporation and Canadian pension fund CPP Investments. The deal represents a significant investment in the commercial real estate sector in Chennai.
Property Details
The One Paramount 1 tech park is located in Chennai’s Porur area and spans more than 12.6 acres of land. It features a gross leasable area of 2.4 million sq ft, encompassing three Grade A office towers. This transaction has been finalized at a cap rate of around 8.5%, which is the highest seen in recent times, indicating the potential return on investment for Keppel.
Tenants and Recovery Period
Several prominent companies, including Genpact, Hitachi Energy, Maersk, NielsenIQ, UPS, VMware, and Wabco, are currently tenants in this commercial complex. The commercial real estate sector has only just begun to recover from the pandemic-induced slowdown. RMZ Corporation, based in Bengaluru, has also faced challenges in terms of leasing milestones but successfully managed to exit the partnership with CPP Investments upon achieving them.
Joint Venture and Future Plans
In 2021, RMZ Corporation and CPP Investments formed a joint venture to develop 10.4 million sq ft of commercial office space in Chennai and Hyderabad. This joint venture included the development of assets such as RMZ Paramount, RMZ Nexity, and RMZ Spire, with a projected value of over $1.5 billion upon completion. The recent acquisition by Keppel represents only the exit from one asset in Chennai, as CPP Investments continues to be a partner of RMZ Corporation in other properties.
Private Equity Investment in Indian Real Estate
The first half of 2024 witnessed resilient private equity investment in Indian real estate, with institutional investment reaching $4.8 billion across 40 deals. Despite the economic challenges faced globally during this period, the Indian office sector has witnessed sustained growth in demand. The investment volumes in the first six months of 2024 have already reached 81% of the total investments made in 2023, which amounted to $5.8 billion.
Future Growth Plans of RMZ
RMZ Corporation, owned by the Menda brothers, aims to create an additional $25 billion worth of assets over the next five years. With the majority of the development planned in the commercial segment, the company is envisioning approximately 135 million sq ft of gross development, with a focus on office spaces followed by mixed-use, industrial and logistics, hospitality, and residential properties.
Overall, Keppel’s acquisition of One Paramount 1 tech park reflects the growing confidence in the recovery and potential of the commercial real estate sector in Chennai. The collaboration between Keppel, RMZ Corporation, and CPP Investments demonstrates the attractiveness of Indian real estate to global investors, despite the challenges posed by the pandemic. With a resilient private equity investment landscape and sustained growth in the office sector, this acquisition sets a positive tone for future developments in the Indian real estate market.
