This is Ivanhoe Cambridge’s first direct investment in India’s commercial office sector, said a top executive.
“We would like to focus on commercial office, warehousing as the primary theme in India. The office sector has gone through a metamorphosis with institutional capital and ownership patterns have changed. Business campuses are getting more evolved. There has been an ongoing churn in the residential sector and it’s becoming more institutionalized,” said Chanakya Chakravarti, managing director, India, Ivanhoé Cambridge said in an interaction.
Outside the partnership with Embassy, Chakravarti said they are open to explore opportunities beyond the southern cities.
So far, the Canadian investor has funded both logistics and residential ventures in the country.
In 2017, Ivanhoe Cambridge and Quadreal Property Group invested around $400 million in Logos India to modern logistics facilities in India. The investor along with Piramal Enterprises Ltd invested ₹500 crore in Lodha Group’s Palava township project in 2019, its first transaction, two years after they launched the Piramal Ivanhoe Residential Equity Fund.
Chakravarti said they took a tactical decision to pause investments from the joint fund with Piramal, which in hindsight was a “good call, however, the partnership continues.”
Ivanhoé Cambridge and Embassy will invest in an 80:20 ratio, with an initial focus on the Bengaluru and Chennai. The platform will invest in develop-to-core and acquisition of partially developed business park opportunities.
The development tenure of the platform is 8 years while the investment period is 3 years.
The seed asset for the platform will be the first phase of the 60-acre Embassy East Business Park located in Whitefield, Bengaluru. The first phase will be developed on nine acres, with 1.3 million sq. ft gross leasable area.
The first phase of the project is expected to be ready for occupancy by early 2024.
On the partnership with Embassy, Chakravarti said “the healthy build-to-core economics, quality tenant covenants, deepening secondary markets and overall market formalization make for an interesting opportunity.”
Aditya Virwani, chief operating officer, Embassy Group said there will be around four projects under the platform, focused on Bengaluru, Chennai and maybe a third city at a later date.
Chakravarti said that a rebound in the commercial office sector should happen in a year’s time.
“Real estate is becoming more service-oriented and hybrid workspaces are here to stay. Bengaluru remains a preferred location even among global cities for office development and there is high demand from global capability centres and research and development campuses,” he added.
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