GIC to buy 1.1 million sq ft Phoenix Group's IT SEZ in Hyderabad for Rs 1,050 crore

GIC to buy 1.1 million sq ft Phoenix Group’s IT SEZ in Hyderabad for Rs 1,050 crore

Singapore sovereign wealth fund GIC has entered into an agreement to buy an Information Technology-Special Economic Zone (IT-SEZ) spread over 1.1 million sq ft in Hyderabad’s Gachibowli locality from the Phoenix Group for Rs 1,050 crore, persons with direct knowledge of the development said.

The entire development, Phoenix Aquilla, has two towers spread over 1.8 million sq ft and the first tower with 7 lakh sq ft has already been completed and leased. Both the towers situated next to Amazon’s operational campus are separate and independent parks.

The second block with 1.1 million sq ft space is currently under construction and is expected to be completed in the next 15 months.

Last year, in one of the single largest leasing transactions in the country, this entire IT park was pre-leased to American IT major Micron Technologies.

The deal with GIC is a forward purchase agreement as the project will be handed over by the Phoenix Group after completing the entire construction and execution.

GIC has paid part of the consideration amount upfront and balance will be transferred after the project’s handover to them.

ET’s separate email queries to GIC and the Phoenix Group remained unanswered until the time of going to press. Transaction advisor CBRE South Asia declined comment for the story.

Earlier this month, global alternative investment advisor Varde Partners invested over Rs 1,150 crore in the Phoenix Group’s two under-construction IT parks.

Prior to inducting GIC and Varde Partners, the developer entered into alliances with global entities such as CapitaLand, Xander, Lake Shore for its other projects.

In February, Ascendas India Trust entered into an agreement with the Phoenix Group to acquire an IT SEZ project for Rs 506 crore. This project, an IT SEZ, aVance 6 at HITEC City in Hyderabad, is spread over 6.3 lakh sq ft and around 98.3% of the space here is leased to Amazon Development Center.

In 2019 Abu Dhabi Investment Authority (ADIA)-backed Lake Shore India Advisory bought a majority stake in a retail mall project in Hyderabad from Phoenix Group for Rs 1,000 crore, inclusive of construction funding.

In 2018, Xander Investment Management, the private equity real estate arm of global investment firm, The Xander Group, signed a Rs 2,550 crore primary investment with the Hyderabad-based developer for development and acquisition of 4.5 million sq ft office space in the city.

Notwithstanding the Covid19-induced economic shock, global institutional investors’ appetite for Indian real estate has continued to grow as against the earlier expectation of a decline in their interest due to a bruised economy and challenges like the Work-from-Home model.

Indian real estate sector is expected to continue to witness increased interest and higher allocation of long-term capital from them given the limited growth opportunities in other developing markets.

A likely repair of the bruised economy, improving trade relations, policy support and progress on the vaccination front are the key factors expected to drive the sentiment henceforth.

Institutional investment in the Indian real estate staged a smart recovery during the quarter ended December with $3.5 billion investments. As a result, the year 2020 closed with $5 billion investments, equivalent to 93% of 2019 transactions, despite a sudden halt brought on by the pandemic.