Blackstone Eyes BKC Mumbai Project with Adani Link

Reports indicate that the Blackstone real estate project BKC Mumbai is currently engaged in advanced discussions regarding the acquisition of Adani Realty's commercial real estate project, Inspire BKC, situated on the outskirts of Mumbai's vibrant business district, Bandra-Kurla Complex (BKC). Sources familiar with the matter suggest that the US-based private equity firm is poised to finalise a deal valued between ₹1,800 Crore and ₹2,000 Crore for the development, which encompasses a sprawling 800,000 square feet office skyscraper.

Over the past couple of years, Adani Group's real estate arm has been exploring avenues to monetize this 10-story office tower, engaging in discussions with both global and domestic investors such as Shapoorji Pallonji Investment Advisors and Brookfield India. It's noteworthy that Blackstone Group had previously indicated interest in acquiring this property.

However, conversations surrounding the deal encountered a roadblock with the onset of the Covid-19 pandemic in 2020, amidst concerns over office absorption growth. Nevertheless, recent developments have seen a resurgence in interest, attributed to the gradual return to office-based work and the resurgence of the commercial property sector. Reports suggest that Adani Inspire has witnessed numerous significant office deals, leading to over 90% occupancy of the tower and reigniting investor interest.

Among the tower's primary tenants are industry giants like Reliance Nippon Life Insurance, Novartis, MUFG Bank, and Ascendas First Space Development Management. The latest leasing agreement saw coworking office space provider Bhive Workspace securing approximately 62,000 square feet across seven offices in Inspire BKC, under a five-year contract.

Furthermore, lease charges for this agreement have been set at ₹205 per square foot per month, with a provision allowing for a 15% increase after three years.

Current data indicates a robust performance in India's top seven office markets, with net absorption surpassing 40 million square feet and projected to reach 41.97 million square feet by 2023. This milestone not only marks a significant rebound post-Covid but also stands as the second-largest yearly absorption after the levels achieved in 2019.

Institutional investors are exhibiting strong confidence in the Indian office sector, buoyed by an optimistic growth outlook and sustained demand. This sentiment has catalysed a surge in activity, with prominent global and domestic funds swiftly executing substantial transactions, signalling a promising trajectory for the commercial real estate landscape.