The property sector witnessed two capital raising announcements by Mumbai developers over the weekend. Oberoi and IBREL approved plans to raise equity capital to fund the companies’ growth plans. These announcements imply improving confidence in the market outlook. The Mumbai residential market has already seen an uptrend in pre-sales and is our preferred market given the significant pent up demand and revival in launch activity after almost five years. Separately, CPPIB closed the largest office transaction in Chennai with implied cap rates compressing further, thus confirming our positive view on the office market.
Separately, reports suggest Shapoorji Pallonji has sold its IT park in Chennai for R1,400 crore to Canada Pension Plan Investment Board (CPPIB). The IT park has a leasable area of 2.7msf housing marquee tenants Amazon, CitiBank, Ford etc. Of the total area, ~2msf of operational space and additional 0.7msf of are under development. Based on market remts, we estimate cap rate of 9-9.5% for the transaction, implying continued compression of spreads for the office assets.