Keppel Makes Major Move in Indian Real Estate: Buys ₹2,100 Cr Office Asset in Chennai from RMZ & CPP Investments

Singapore-based global asset manager Keppel has purchased One Paramount 1 tech park in Chennai for about ₹2,100 crore. This prime office property is jointly owned by real estate developer RMZ Corporation and Canadian pension fund CPP Investments. The tech park, located in Chennai’s Porur area, spans over 12.6 acres and has a gross leasable area of 2.4 million sq ft, consisting of three Grade A office towers.

“This deal was signed at a cap rate of around 8.5%, the highest in recent times,” said a source familiar with the transaction. The payment is expected this week. The cap rate is a ratio that shows the potential return on investment based on the property’s net operating income and purchase price. The tech park hosts tenants like Genpact, Hitachi Energy, Maersk, NielsenIQ, UPS, VMware, and Wabco.

“Commercial real estate is just starting to recover from the post-pandemic slowdown. RMZ faced challenges in leasing milestones and exited with their financial partner once these milestones were achieved,” said another source.

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. The projected value of these assets, including RMZ Paramount, RMZ Nexity, and RMZ Spire in Hyderabad, was expected to exceed $1.5 billion upon completion.

“The exit is only from one asset in Chennai. CPP continues to partner with RMZ in other assets,” said another source. Keppel and CPP did not respond to queries, while RMZ declined to comment.

RMZ aims to create an additional $25 billion in assets over the next five years, focusing mainly on commercial development. The Menda brothers-owned company plans to develop around 135 million sq ft, with a major share in the office segment, followed by mixed-use, industrial and logistics, hospitality, and residential sectors.

Despite global economic challenges, private equity investment in Indian real estate remained strong in the first half of the year. Institutional investment surged to $4.8 billion across 40 deals in the first half of 2024, reaching 81% of the total investment in 2023, which was $5.8 billion. The Indian office sector continues to grow in demand, defying the global trend of sluggishness.