Developer and real estate investor Tishman Speyer and partner ICICI Venture, the private equity arm of one of India’s largest banks, will build a $100-million (€78 million) office complex in Hyderabad. The deal marks the New York-based firm’s initial foray into Asia as well as the first project for the year-old joint venture.
Tishman Speyer, which currently owns high profile properties including Rockefeller Center and the Chrysler Center in New York City, and ICICI also said they have retained the firm of internationally renowned architect IM Pei to design the complex, which will likely consist of one or two towers up to 20-stories high.
With its first phase projected to open in 2009, the 1.5 million-square-foot complex is expected to house multi-national corporations who have set their sights on Hyderabad, an emerging IT and biotech hub which has already attracted operations from companies such as Google. The Indian School of Business is also located there.
While there is no shortage of opportunities in India, the joint venture chose Hyderabad because of the business-friendly environment in both the city and the state of Andhra Pradesh, according to Tishman Speyer senior managing director Katherine Farley. The complex will be located in a special economic zone which provides financial incentives to companies located there.
“The state government in Hyderabad is very entrepreneurial,” said Farley, who oversees the firm’s activities in emerging markets. “They have been courting both multi-national companies, investors, and developers to attract them to Hyderabad over other places so that really facilitated things.”
The joint venture will look for office, residential and mixed-use opportunities in the seven metro areas in India with the largest presence of multi-national companies—Delhi, Mumbai, Bangalore, Pune, Hyderabad, Kolkata and Chennai.
“Our current assessment is that those seven cities are where the greatest concentration is, but we would tend to follow the multi-national companies,” to the places that they want to go, said Farley.
As vacancy rates drop and rents rise in Bangalore, Mumbai and Delhi, international firms are looking to the second-tier cities—Pune, Hyderabad and Chennai—to house some of their operations. And, development is expected to move to an even greater degree to third-tier cities as prices rise there as well.
In addition to the shortage of supply of top-flight office space in cities across the country, Farley says Tishman Speyer’s knowledge of what international firms want when it comes to world class office space and ICICI’s knowledge of the local market give their joint venture an advantage.
“One of the things we really bring to the picture is a familiarity and good relationships with multi-national companies and a familiarity with what they need in terms of Class A product and we anticipate a presence in creating Class A product for them in the main cities they want to be in,” says Farley.
A prior relationship between Tishman Speyer and Pei was the key to landing the high-profile architect, the designer of such landmarks as the pyramids at the Louvre in Paris.
“We have worked with him before and we have a good relationship with [his firm],” she says. “They were delighted to have the project and we were obviously delighted to have them do it. We think it’s very important that the first project set the stage for the kind of product we anticipate producing in India.”