The operating platform has completed new office projects spanning nearly 2.5 million square feet across its projects including in Lower Parel in Mumbai, Bangalore’s Outer Ring Road (ORR) and Gurgaon, bringing its total portfolio size to over 22 million square feet.
The demand for commercial real estate is witnessing a sustainable recovery after the Covid19 pandemic, and more than 15% of the company’s new supply has already been pre-committed.
“Our business is basically a mirror image of what’s going on in the economy… We’re able to show strong rental performance and achieve these sorts of numbers just because the economy is expanding and growth is driving the business,” Quiser Parvez, CEO, Nucleus Office Parks, told ET In an exclusive interaction.
After the pandemic, the Indian commercial real estate market has seen slower uptake due to mobility restrictions and the option to work from home offered by businesses.
“It turns out that this year will be the year of recovery. In the first half of 2022, the Indian office market has already recorded a total intake of 28 million square feet, a figure that was achieved during the whole of 2021,” said Parvez, adding that a large part of the contracts The new lease of Nucleus was in Mumbai real estate.
The operating platform comprises 18 assets in the country’s top five real estate markets including Mumbai, Bangalore, NCR, Chennai and Ahmedabad.
Apart from these, the major US-based private equity firm owns more than 110 million square feet of commercial assets in the country through its joint ventures and alliances with Indian developers.
“Each of our properties is uniquely positioned in its own small market and can attract rental payments over the rest of the supply in that area,” Parvez said.
According to him, rents in key markets like Mumbai are starting to see upward momentum as demand is strong and supply remains constrained as construction costs have seen a significant escalation affecting project completion.
“Decreasing vacancy levels in key markets is indicative of rising demand and constrained supply whose combination is starting to push rents higher. For example, rents in Mumbai have risen 2.6% in the past two quarters.
Based on hiring in the past 18-24 months, the growing demand of the five largest IT companies for office space is expected to reach approximately 11.67 million square feet over the next two years once offices open at full capacity. It is reported that the five largest IT companies in India have hired nearly 260,000 new employees during the period from April 2020 to September 2021.
According to Parvez, the steady acquisition of space by the IT sector continues as global and local companies have picked up significant office space in the past few months indicating a strong return to leasing momentum.
In terms of office market performance, all top eight cities recorded transactions of 25.3 million square feet during the first half of 2022, while office completions were recorded at 24.1 million square feet in the same period, according to data from Knight Frank India.
The Bangalore and Pune office markets recorded maximum annual rental growth of 13% and 8% respectively due to high demand. Hyderabad, Mumbai and NCR also saw a moderate increase in rent values while rent values in Chennai, Ahmedabad and Kolkata remained stable.
Blackstone has emerged as the most powerful institutional investor in India with total assets under management estimated at nearly $60 billion across various sectors, making it one of the top 10 business groups in the country. Real estate accounts for approximately $20 billion of this market value across 42 investments.
It is the largest owner of office and retail assets in India with an office portfolio of 135 million square feet, over 10 million square feet of retail real estate and 40 million square feet of logistics space.