 "RMZ eyes No 1 office assets owner slot")
RMZ Corp, the Bengaluru-based developer backed by Qatar Investment Authority (QIA), plans to increase its office property portfolio by six times in the next five years through development, acquisition and aggregation.
RMZ Corp owns 13 million sq ft office space in the country and the company wants to take this to 20 million sq ft by 2017 and 80 million sq ft by 2021. In the first phase up to 2017, it will develop and acquire properties and after that it will offload a stake in the holding company, according to Raj Menda, chairman of RMZ Corp.
“After 20 million sq ft, we can list in Singapore or India,” Menda said. Going by RMZ’s plans, it could overtake the country’s largest office developers like DLF and Embassy by 2021.
DLF, the country’s largest property developer, has 27 million sq ft of office assets and wants to develop 5 million sq ft in the next couple of years. The Embassy group, another Bengaluru based developer, has about 30 million sq ft of offices and plans to add 12 million sq ft in the next three years. Embassy also has a joint venture with Blackstone.
“In the first phase, we want an equal mix of development and acquisition of office properties,” Arshdeep Sethi, managing director, development, RMZ, said. He added the company planned to invest $500 million to develop office properties in the next 12-18 months.
RMZ has $200 million of lease revenue every year and is expecting this to grow 30-35 per cent this year. “We envisage a supply crunch in 2017 and 2018 as whatever has come to the market has already been absorbed. New supply will only come in 2019,” Sethi said.
However, experts said RMZ might find it challenging to become the country’s largest office property developer. "It it is difficult to predict the next five years, as all depends on continued funding and growing market demand. But they may become one of the top five players in India," said Ashok Kumar, chief executive officer, Cresa Partners, a commercial realty services firm.
RMZ Corp recently bought an 800,000 sq ft IT park in Gurgaon from real estate developer BPTP for about $150 million. The deal, which is a mix of debt and equity, marked the Bengaluru-based company's foray into the NCR. RMZ also bought Essar's business park, Equinox, in Mumbai for about $360 million.
“Besides Bengaluru, Chennai and Hyderabad, we want to develop and acquire properties in Mumbai and the NCR. We are evaluating deals in Gurgaon and BKC and Western Express Highway in Mumbai,” Sethi said.
In 2013, QIA invested $300 million in a special purpose vehicle of RMZ in one of the largest investment deals that year. Baring Private Equity Partners also has a 28 per cent stake in the SPV.
In 2015, the country's top eight cities recorded leasing of 40 million sq ft office space, which is the highest in the last five years. This was about 15 per cent more than the absorption in 2014.
According to Colliers International, Bengaluru, with about 13.43 million sq ft of office absorption and 12.85 million sq ft of new construction, continued to hold its number one position among cities. The city had 33 per cent and 41 per cent, respectively, of the total absorption and new supply among eight major cities in the country this year.
