Property fund Ascendas India Trust is set to buy an office building of 1 million sq ft for about Rs 750 crore in north Bengaluru, making it one of the major deals this year in the country’s biggest commercial office market, people familiar with the matter said. The trust is the main funding vehicle here of Singapore’s real estate group CapitaLand.
Ascendas India Trust has entered into a forward purchase agreement (FPA) with Hyderabad-based Garden City Realty which owns the 7-acre land parcel on which the office tower is expected to come up. Ascendas will make milestone payments and will own the building upon full payment.
A forward purchase deal is an agreement where the buyer pays an advance to the seller to buy the developed property at a future date. The advance is used to fund the construction, similar to the one in the residential sector where the buyer’s money is used to develop the project and handed over post completion. Such deals are gaining in momentum in India as it helps global investors shift the risk of land acquisition, approvals and delivery on to local partners.
Garden City managing director Murali Krishna confirmed that talks are on, but declined to divulge details. Ascendas Singbridge did not respond to requests for comment.
Ascendas has been involved in similar FPA deals in the past. In June, it bought IT-focused special economic zone BlueRidge phase III with total leasable space of 1.8 million sqft in Pune’s Hinjewadi area from Nalanda Shelter and Brickmix Developers. Last year, it bought two office buildings totaling 1.4 million sqft in Navi Mumbai’s Aurum Platz IT Park for about Rs 930 crore.
“Serious office developers are already taking up positions in north Bengaluru, which with its growing physical and social infrastructure is now the most sought after location for future businesses of the city, “ Juggy Marwaha, executive director in property consultancy JLL India, said.
Ascendas India Trust owns seven IT parks and six modern warehouses in India of around 12.6 million sqft spread across various cities. It is a real estate investment trust (REIT), listed on the Singapore stock exchange.
Garden City has been looking to expand its presence in the Bengaluru market. Last month, it entered into a joint development agreement with Nitesh Estates for three of its residential projects.
