US banking group Goldman Sachs has agreed to take on lease 1.6 million
sq ft of office space - an area the size of nine football fields - in
Bangalore, in what is the biggest recorded commercial property deal to
date in India.
The two-step transaction, according to people familiar with the transaction, will see the New York-headquartered investment bank initially taking up one million square feet. Another 600,000 square feet will be taken up in the second step of the transaction.
The space, housed in a purpose-built block of three buildings for Goldman, is located on Bangalore's Sarjapur outer ring road. To be built on 14 acres by local builder Kalyani Developers, it will be ready in 2017 and house a bulk of the bank's staff in Bangalore, now scattered across six offices in a city IT park.
A spokesman for Goldman's Asian operations confirmed the bank had taken on lease one million square feet. "This new lease is...to consolidate our presence and to accommodate future growth in the country," he said. A senior executive at Kalyani, asking not to be identified, also confirmed the deal.
The transaction is welcome news for the commercial property business, which has been plagued by overcapacity and hit hard by the economic slowdown that has crimped demand for office space. While the slowdown has meant a sharp drop in new ventures seeking space, even businesses that need office space are choosing to adopt a wait-and-watch strategy in the hope of sealing deals at lower prices.
Goldman employs 4,000 people in Bangalore, performing back-office functions as varied as technology, finance and other operations.
Deal Hints at Major Ramp-Up
A deal for office space of this size suggests a major ramp-up by Goldman in India in the years ahead, with commercial property market experts estimating that one million square feet of space can seat around 10,000 people.
In March this year, Goldman held its annual board meeting in Mumbai and Delhi. The assembly of all its high-profile directors in India for three days was widely viewed as an acknowledgement of the importance it attaches to the country.
Goldman, which was advised by real estate consultant CBRE, will pay a rental of around Rs 49 per square foot a month, which works out to Rs 60 crore a year as rent for the one million square feet. CBRE declined to comment.
The bank has also engaged New York based architect Pei Cobb Freed & Partners, which was the key designer for the modernisation of the Grand Louvre in Paris, to design the building and the workspace.
Previous single-location lease deals in India have been well short of the one million square feet mark and this one easily beats the previous record - IT firm Cisco's deal for 700,000 square feet earlier this year, also in Bangalore. This deal is the second big real estate transaction involving a US bank in recent weeks.
Last month, Citigroup bought a building with 297,000 square feet of space in Mumbai's Bandra Kurla Complex for Rs 985 crore to house its India headquarters from a consortium led by the Purnendu Chatterjee Group.
According to property advisory firm CBRE, demand for office space slowed down in the January-March 2012 quarter, with around 4.1 million sq ft getting absorbed across the top cities in India, compared with almost 6.5 million sq ft in the previous quarter.
The two-step transaction, according to people familiar with the transaction, will see the New York-headquartered investment bank initially taking up one million square feet. Another 600,000 square feet will be taken up in the second step of the transaction.
The space, housed in a purpose-built block of three buildings for Goldman, is located on Bangalore's Sarjapur outer ring road. To be built on 14 acres by local builder Kalyani Developers, it will be ready in 2017 and house a bulk of the bank's staff in Bangalore, now scattered across six offices in a city IT park.
A spokesman for Goldman's Asian operations confirmed the bank had taken on lease one million square feet. "This new lease is...to consolidate our presence and to accommodate future growth in the country," he said. A senior executive at Kalyani, asking not to be identified, also confirmed the deal.
The transaction is welcome news for the commercial property business, which has been plagued by overcapacity and hit hard by the economic slowdown that has crimped demand for office space. While the slowdown has meant a sharp drop in new ventures seeking space, even businesses that need office space are choosing to adopt a wait-and-watch strategy in the hope of sealing deals at lower prices.
Goldman employs 4,000 people in Bangalore, performing back-office functions as varied as technology, finance and other operations.
Deal Hints at Major Ramp-Up
A deal for office space of this size suggests a major ramp-up by Goldman in India in the years ahead, with commercial property market experts estimating that one million square feet of space can seat around 10,000 people.
In March this year, Goldman held its annual board meeting in Mumbai and Delhi. The assembly of all its high-profile directors in India for three days was widely viewed as an acknowledgement of the importance it attaches to the country.
Goldman, which was advised by real estate consultant CBRE, will pay a rental of around Rs 49 per square foot a month, which works out to Rs 60 crore a year as rent for the one million square feet. CBRE declined to comment.
The bank has also engaged New York based architect Pei Cobb Freed & Partners, which was the key designer for the modernisation of the Grand Louvre in Paris, to design the building and the workspace.
Previous single-location lease deals in India have been well short of the one million square feet mark and this one easily beats the previous record - IT firm Cisco's deal for 700,000 square feet earlier this year, also in Bangalore. This deal is the second big real estate transaction involving a US bank in recent weeks.
Last month, Citigroup bought a building with 297,000 square feet of space in Mumbai's Bandra Kurla Complex for Rs 985 crore to house its India headquarters from a consortium led by the Purnendu Chatterjee Group.
According to property advisory firm CBRE, demand for office space slowed down in the January-March 2012 quarter, with around 4.1 million sq ft getting absorbed across the top cities in India, compared with almost 6.5 million sq ft in the previous quarter.
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