Embassy & Century to jointly develop IT Park in Bengaluru

Bengaluru: Realty firm Embassy Group is close to signing a joint development deal with Century Real Estate Holdings Pvt. Ltd for the latter’s 11-acre land parcel in Bengaluru’s Bellary Road area.

Embassy, a prominent office space developer backed by global investor Blackstone Group Lp, plans to build an information technology (IT) park on the land. It will be an equal partnership between Embassy and Century Real Estate, where the former will develop the project. The transaction is expected to close in a month’s time. “The IT park will be about 1.3 million sq ft. It will involve an investment of around Rs.500 crore including a deposit for the land,” said Embassy chairman Jitu Virwani.

The joint development deal is in line with Century Real Estate’s strategy to give out land parcels that are earmarked for commercial office usage to strategic partners. The company, one of the largest land owners in Bengaluru, plans to focus on its residential development business and launch more projects in that segment, said a person directly familiar with the company’s plans, but didn’t wish to be identified.

“The company is also in talks for similar deals for its 25-acre land in Yelahanka, 22 acres in Hebbal and another six acres in Electronic City,” the person said. After raising Rs.720 crore from Piramal Fund Management Pvt. Ltd and Altico Capital India Pvt. Ltd last year, it raised another Rs.520 crore from Piramal earlier in 2016 to refinance high-cost debt, use some of it as construction finance and to make land payments as well.

In 2014, Embassy and Blackstone jointly bought out a 6.5 acre under-development project from investment bank Goldman Sachs Group Inc. and Century Real Estate. The project was later re-launched and has a Four Seasons hotel and serviced residences coming up. Joint development deals in real estate are gaining momentum as mid-sized developers look to monetise land parcels by partnering with larger developers, who are better poised to develop these projects.

In the last three years, with the real estate sector going through a slowdown, new forms of partnership models such as development management, joint development and joint ventures have emerged. In January, Godrej Properties signed a development management agreement with Lotus Greens to build a housing project in Sector 150 of Noida, marking the former’s entry into the Noida market. It also entered into a joint development deal with Vihang Group to develop a residential project in suburban Mumbai’s Thane area.

“The joint development model is the way to go forward. Real estate is an opportunistic play and so, it makes sense for family owned real estate firms or those who don’t have the bandwidth to develop many projects on their own to ally with large developers with better execution capability, financial strength and also the asset management capability after developing the project,” said Juggy Marwaha, managing director-south, JLL India, a property advisory.

Author: Madhurima Nandy
Credits Live Mint

Leave a Reply

Your email address will not be published. Required fields are marked *