Netmagic buys Mumbai office space for ~321 cr

In the biggest office property deal in Mumbai in the past two years, information technology services company Netmagic has entered into an agreement with the Hiranandani group and Balaji Teledevelopers to buy a 286,691-sq ft building in Lighthall in the Chandivali area of Mumbai.

Netmagic would pay ~321 crore to the developers in a staggered manner over the next 13 months, said the source.

This transaction was structured as a perpetual (lifetime) lease by Netmagic at a one-time price of ~11,198 per sq ft with an annual lease rent of ~1 per sq ft, the source added.

The previous big office deal was when pharmaceutical major Abbott bought a ~1,400-crore office property in BKC from Godrej Properties two years ago.

Lighthall is a joint venture between Ekta Kapoor’s Balaji and Hiranandani and is located close to Powai, which houses Hiranandani properties.

Niranjan Hiranandani declined to comment on the deal, while Netmagic did not respond to a mail on the subject.

“Netmagic has negotiated a sweet deal primarily for two reasons: they are investing in a building of their choice and specifications and and at a lower price than the prevailing market capital values of ~13,50016,000 per sq ft in and around Powai,” said Abhishek Tiwari, co-founder at CRE Matrix, a commercial real estate data analytics firm.

The prevailing market capital values are derived using prevailing cap rates for fully leased commercial office assets and current average rental values.

The joint venture between the Hiranandani group and Balaji Teledevelopers is shared 62.5 per cent to 37.5 per cent.

The proposed built-to-suit (BTS) IT/ITeS building has two basements, ground plus six floors, with a total built-up area of 2,86,691 sq ft plus a 27,571 sq ft power supply building.

Lighthall in Hiranandani Business Park is occupied by Huntsman, Netmagic, Abbott, Piramal Enterprises, Bharti Airtel, Equity Packaging and Incredible Technology.

Suburban Mumbai has seen some major office deals in recent months. In one of the biggest front-office lease deals in Mumbai, US-based food major General Mills has renewed agreements for 184,120 sq ft office space in Powai for rents ranging from ~104 to ~110 a sq ft per month.

Recently, WeWork, a American co-working company, took up 190,000 sq ft office space in the BKC area from financial services company Enam at a rent of ~230 per sq ft per month.

Late last year, Abbott took up 160,000 sq ft in the Andheri area at ~120 per sq ft per month. According to global realty consultant CBRE, office rents have remained stagnant in most hubs of Mumbai since the fourth quarter of 2014.