Keppel Acquires Major Office Asset in Chennai for ₹2,100 Crore

In a significant transaction within the Indian real estate market, Singapore-based global asset manager and operator Keppel has acquired the One Paramount 1 tech park in Chennai for approximately ₹2,100 crore. The prime office asset, located in Chennai's Porur area, was jointly owned by real estate developer RMZ Corporation and Canadian pension fund CPP Investments. 

Spread over more than 12.6 acres, One Paramount 1 boasts a gross leasable area of 2.4 million square feet, encompassing three Grade A office towers. The acquisition marks one of the highest-valued transactions in recent times, with the deal being finalized at a cap rate of around 8.5%. The cap rate, a key metric in real estate investment, represents the ratio of the property's net operating income to its purchase price, indicating a promising return on investment.

The commercial complex houses prominent tenants, including Genpact, Hitachi Energy, Maersk, NielsenIQ, UPS, VMware, and Wabco, making it a highly desirable property in Chennai's thriving commercial real estate market.

This transaction represents a strategic move for both RMZ Corporation and CPP Investments. In 2021, the two entities formed a joint venture to develop 10.4 million square feet of commercial office space in Chennai and Hyderabad. This partnership aimed to create high-value assets, including RMZ Paramount, RMZ Nexity, and RMZ Spire in Hyderabad, with a projected value exceeding $1.5 billion upon completion.

Despite the exit from the One Paramount 1 asset, CPP Investments continues to partner with RMZ in other projects. This partial exit allows RMZ Corporation to focus on its broader strategic goals, which include creating an additional $25 billion in assets over the next five years. The company's future developments are expected to span approximately 135 million square feet, with a significant focus on the office segment, followed by mixed-use developments, industrial and logistics properties, hospitality, and residential projects.

The Indian commercial real estate market has shown resilience, even as global markets faced challenges post-pandemic. The sector has seen a steady recovery, with private equity investment in Indian real estate remaining robust. A recent report highlighted that institutional investment in Indian real estate surged to $4.8 billion across 40 deals in the first half of 2024. This investment volume represents 81% of the total investments made in 2023, which stood at $5.8 billion.

This trend underscores the sustained demand for office spaces in India, contrasting with the global trend of sluggishness in the commercial real estate market. The strategic acquisition by Keppel and the continued investment by entities like CPP Investments signal confidence in the long-term potential of the Indian commercial real estate sector.

Keppel's acquisition of the One Paramount 1 tech park in Chennai for ₹2,100 crore highlights the dynamic and resilient nature of India's commercial real estate market. This transaction not only reflects the high value and demand for prime office assets in key Indian cities but also underscores the strategic moves by major players like RMZ Corporation and CPP Investments to optimize their portfolios and focus on long-term growth.