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Edelweiss Alternatives, the investment arm of the Edelweiss Group, has made a significant investment in Bengaluru's booming IT sector by acquiring a 1.21 million sq. ft office park for over INR 1,475 crore. This marks the largest office tower buyout in the city so far this year.
The 12-story building, located in the prime Hebbal locality near major transport links, is currently fully leased to various companies from diverse sectors, including technology, banking, and IT services. Key tenants include Bayer and IQVIA.
This acquisition reflects the growing confidence of institutional investors in the Indian office market, particularly in major cities like Bengaluru. The city witnessed a record-breaking 41.97 million sq. ft of office space absorption in 2023, highlighting the sustained demand for commercial real estate.
Edelweiss plans to leverage its expertise to improve the property's financial and operational performance. This includes implementing technological solutions, obtaining relevant certifications, and strategically allocating capital for upgrades and maintenance. These efforts aim to enhance the asset's value and potentially unlock future opportunities to increase rental income.
The acquisition aligns with Edelweiss's strategy to build a strong portfolio of commercial office properties across major Indian metros. Their rental yield fund, currently raising INR 5,000 crore, targets markets like Bengaluru, Hyderabad, Delhi-NCR, and Mumbai. The company's goal is to acquire a 10 million sq. ft portfolio within three years, offering investors compelling investment opportunities through a pre-REIT strategy.
Edelweiss Alternatives, a part of the Edelweiss Group, focuses on alternative investments across various asset classes, including real estate. The company has a proven track record of identifying and acquiring high-quality assets and maximising their potential through active management strategies.
Previously owned by MFAR Developers, the IT park enjoys a strategic location with excellent access to transportation and other amenities. Its diverse tenant base and strong occupancy rates make it a valuable addition to Edelweiss's growing portfolio.
This acquisition marks a significant development in Bengaluru's commercial real estate landscape, highlighting the city's attractiveness for investors and the continued growth potential of the Indian office market.
Following a similar approach, established Real Estate Investment Trusts (REITs) have also been actively acquiring office towers in India. These acquisitions highlight a growing trend of companies consolidating ownership of strategic office assets.
One prime example is Embassy Office Parks' purchase of Bengaluru's World Trade Centre complex in 2018 for approximately INR 2,471 crore. This high-profile acquisition involved purchasing the entire property, encompassing not just office spaces but also retail areas and parking facilities, demonstrating a clear commitment to complete ownership.
In 2023, Embassy REIT purchased the single-tenant "Galleria" office tower in Gurugram for a significant INR 750 crore, suggesting potential complete ownership. Similarly, Mindspace REIT and Ascendas India Trust (a-iTrust) acquired single-tenant office towers in Pune and Bengaluru, respectively, for INR 275 crore and INR 320 crore in recent years. These REIT acquisitions demonstrate an increased growth for acquiring strategic office properties, potentially including complete ownership of certain assets.
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