Smart City initiative and GST roll-out seem to augur well for both IT and commercial Special Economic Zones (SEZs) with institutional funds and domestic real estate developers pitching in to develop the category.
The investments in SEZ as a category are picking up nearly after five years. Several companies including Reliance, Unitech and DLF Ltd had in the past denotified SEZ land and monetised the land parcel.
Between 2008 and 2011, at least 33 SEZs were denotified, according to Government data.
Global fund house Xander recently acquired an IT SEZ in Perungalathur, Chennai, from Shriram Properties for $350 million (₹2,300 crore).
The deal involves 1.7-million sq ft of occupied and operational SEZ, and a partnership with Shriram Properties to deliver the under construction 1.9 million sq ft. Shriram Gateway is the first integrated township in Chennai comprising a large office campus with 4.6 million sq ft of SEZ and IT office space.
“This acquisition demonstrates our continued interest in large, well-positioned assets with growth potential across gateway cities in India, and nicely complements our existing office portfolio. We see the opportunity to deliver additional high-quality supply in a market where vacancy is rapidly falling,” said Rohan Sikri, Senior Partner, The Xander Group.
The campus currently provides jobs to over 20,000 employees which will grow to an estimated 50,000 employees by 2020. Accenture is currently the largest tenant in the SEZ.
“The mixed use, commercial-cum-residential project is a benchmark in the industry, and we plan to develop many such projects across cities in India,” M Murali, MD, Shriram Properties, said.
Mumbai-headquartered L&T Realty too got an approval to develop an SEZ in Bengaluru. The company plans to develop around 3 million sq ft of commercial office space in the SEZ, which is part of a large mixed-use development.
While Mahindra Group-owned Mahindra World City is also developing self-contained SEZs, its Chennai and Jaipur developments comprise large-format integrated cities that have been planned to be self-contained, with co-located industrial, residential and commercial infrastructure.
Other institutional fund which has made an investment into SEZ and mixed use development is Ascendas-Singbridge Group which has announced the acquisition of a 16-acre land parcel in Pune.
AIGP has a target asset size of S$600 million. Its first investment was in the International Tech Park, Gurgaon. With a total development potential of 2.2 million sq ft, the land parcel will be developed into an IT and IT Special Economic Zone park with supporting amenities. The first phase will offer approximately 1 million sq ft of space, and is scheduled to be completed by early 2020.
Sanjay Dutt, CEO, Operations and Private Funds, Ascendas-Singbridge India, said: “Pune has seen a consistently strong demand for business space which is evident from the high occupancy levels at our IT parks in the city managed by Ascendas-Singbridge. With this new site in Kharadi, we will be able to offer our occupiers more options within the city.”
Last year, the Embassy Group too received a nod from the Board of Approval to act as exclusive co-developer for the Notified SEZ at Chennai previously known as SNP Infrastructure Private Ltd.
The project, a 30-acre SEZ property near Vel’s university on Thoraipakkam-Pallavaram radial road in Chennai will be known as Embassy Splendid TechZone.
GST roll-outMeanwhile, the roll-out of GST seems to be making SEZs an attractive proposition. “After 2011, this the right moment to make investments in the SEZs, as it is the only scheme, among the many export promotion schemes in India, wherein exemption has been provided from customs duty as well as IGST (Integrated Goods and Service Tax),” a senior government official had recently said at an Assocham event.