Largest Commercial Property Deal Delayed
Eighteen months ago, Global financial leviathan Goldman Sachs had reached an agreement with Kalyani Group – a real estate developer based in Bangalore, to lease almost 1.6 million sq ft of office space in the city. With a rental lease of around Rs. 60 crore a year for one million sq ft, this was one of the largest leasing transactions in the country. From recent reports it is known that due to certain disagreements the deal might be delayed. A difference of opinions occurred when Goldman Sachs insisted on global standards for its site. However, Kalyani Group has told bankers that the transaction was moving slowly because of some delay on Goldman Sachs’ side.
Now, this hitch for the country’s largest real estate leasing deal is with regard to the slackening demand for office space in the first quarter of the year, with 6.3 million sq ft getting soaked up across main cities. That is a 5% drop from the 6.6 million sq ft figure for the same quarter in 2013.
CBRE, a real estate advisory firm, said that the commercial real estate market in India saw sluggish transaction and a low level of new completions in the new quarter. Main cities in India continued to see heightened caution from corporate occupiers, resulting in restrained leasing activity during the first 3 months of the year.
Having acknowledged differences in developing the site, Goldman Sachs hopes everything will be resolved. “Goldman Sachs continues to anticipate and have every expectation that our partners for this development will resolve and deliver on all agreements. Ultimately, the firm’s strategy and commitment for the build-out of our continuously growing Bangalore office remains unchanged,” said an official. With a current staff count of 5,000 employees spread across the city, the campus in Varthur was to be on ground of over 14 acres. Goldman Sachs had planned to move into the integrated campus, which was to have a holding capacity of 10,000 employees, sometime in 2017.
Source: Business Standard
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