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RMZ Corp has agreed to sell One Paramount tech park in Chennai to Singapore's Keppel for INR 2,100 crore. The deal boasts an 8.6 per cent cap rate, the highest recently. The 2.4 million sq ft complex, jointly owned by RMZ Corp and CPP Investments, was 66 percent leased last year. This sale aligns with Keppel's focus on emerging markets like India. In 2023, foreign investors contributed INR 3.6 billion to India's real estate, accounting for 67 per cent of total inflows. The transaction highlights India's appeal in the commercial office sector, attracting Asian financial institutions and sovereign wealth funds for income-yielding assets and development partnerships.
RMZ Corp has reached an agreement to sell One Paramount tech park, a prime office complex in Chennai, to Singapore's asset manager Keppel for approximately INR 2,100 crore. This transaction boasts a cap rate of 8.6 per cent, the highest in recent times, indicating a strong return on investment. The cap rate is calculated by dividing the operating income of the asset by its current market value. One Paramount, equally owned by RMZ Corp and CPP Investments (Canada Pension Plan Investment Board), is built on 12.6 acres of land with 2.4 million sq ft of gross leasable area. Advertisement
The complex consists of three office towers with large floor plates ranging from 46,400 sq ft to 1.28 lakh sq ft. When the asset was put on the market last year, the average monthly rent was INR 65 per sq foot, with 66 percent occupancy. It was expected that occupancy would increase to over 80 per cent by the time the transaction was completed. The potential net operating income was INR 190 crore, with an outstanding debt of INR 1,100 crore as of 30 September 2023.
Key tenants of One Paramount include Genpact, Hitachi Energy, Maersk, Nielsen IQ, UPS, VMware, and Wabco. This sale aligns with Keppel's reported strategy to increase investments in emerging markets like India, especially as China works to stabilise its property market. In 2023, Keppel acquired an under-development project in Pune from Kohinoor Group.
The transaction is part of a larger trend of foreign investment in Indian real estate. In 2023, foreign investors contributed INR 3.6 billion to India's real estate sector, accounting for 67 per cent of total inflows. The first quarter of 2024 saw foreign investment inflows of INR 500 million. India's commercial office sector remains a bright spot globally and particularly in the Asia Pacific region. Large financial institutions from Asia and sovereign wealth funds have been actively investing in Indian income-yielding assets and partnering with local developers for new projects. In 2021, RMZ and CPP Investments formed a joint venture to develop 10.4 million sq ft of commercial office space in Chennai and Hyderabad, with an estimated value of over INR 1.5 billion upon completion.
One Paramount is one of the assets in this portfolio, alongside RMZ Nexity and RMZ Spire in Hyderabad. The sale of One Paramount highlights the continued interest in Indian commercial real estate from international investors, despite global economic uncertainties. It also underscores the strength of the Indian office market, particularly in major cities like Chennai, which continue to attract multinational tenants and institutional investors. As India's real estate market continues to evolve, such high-value transactions are likely to become more common, reflecting the country's growing status as a key destination for global real estate investmen
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