Introduction to ITPB and CapitaLand Investment
In recent times, the International Tech Park Bangalore (ITPB) has become a hub of activity. Located in a vibrant area filled with commercial buildings, shopping malls, and hotels, the park is seeing a surge of visitors. Older structures in ITPB are receiving much-needed updates, and a previously unused parking lot is now a bustling construction site for over 2.4 million square feet of new office space. This bustling environment exemplifies a significant trend occurring throughout India: the return of office workers and the growing demand for office spaces.
Singapore-based CapitaLand Investment (CLI), which operates ITPB, is capitalizing on this renewal. Their ambition is part of a larger strategy to increase their investments in India.
Investment Goals of CapitaLand Investment
Last September, CLI revealed its plan to significantly boost its investment in India. They aim to increase their funds under management—currently standing at $5.7 billion—to over twice that amount by 2028. Their investment strategy will focus not only on expanding existing business operations, which include office parks, logistics, industrial real estate, and data centers, but also on emerging areas such as renewable energy and private credit for real estate.
Current and Planned Developments
CLI has several commercial projects either underway or in the planning stages in various Indian cities. This drive to expand stems from the promising growth trajectory of the Indian economy and the need to diversify investments in Asia, given the challenges faced in other key markets, especially China.
The Strategy of Diversifying Investments
The term “China + 1” refers to a strategy adopted by many companies looking to diversify their manufacturing and sourcing beyond China, which has historically been attractive for its low production costs and substantial domestic market. However, trade tensions and rising labor costs in China, compounded by the impact of the COVID-19 pandemic, have prompted multinational companies to explore new supply chain opportunities.
While CLI is not a manufacturing firm, the company has taken similar steps to diversify its investment model. Previous investments in China are facing difficulties, particularly following the real estate crisis triggered by the Evergrande Group’s default. As a result, CLI plans to decrease its investment in China from 27% to between 10% and 20% by 2028, while simultaneously expanding its footprint in India, Japan, Korea, and Australia.
India’s Growing Importance
India has emerged as a focal point for CLI’s growth strategy. After merging with Ascendas-Singbridge in 2019, CLI ventured into India’s real estate market, which is rapidly evolving into a prime investment destination. Over the years, CLI has developed tech parks across major Indian cities, supporting the nation’s growth as a global IT outsourcing hub. Currently, approximately 250,000 individuals are employed in CLI-managed parks.
Competition and Investment Goals
Despite its measured growth, CLI has been outpaced by more aggressive U.S. and Canadian competitors. Therefore, CLI aims to increase its presence in the Indian market, targeting a rise in its funds under management in India from about 7% to at least 10% by 2028.
Growth Opportunities in the Office Sector
Post-pandemic, there has been a robust revival in demand for office spaces in India. In 2024, office leasing reached a historic high of 79 million square feet across nine major cities. CLI currently operates 13 office parks, covering 25 million square feet, with plans to develop an additional 14.3 million square feet of office space over the next several years. The increased interest from investors signals a shift in focus toward India’s office market, which is seen as a reliable investment opportunity.
Expanding into Logistics
In addition to the office sector, CLI has focused its efforts on logistics and industrial spaces. The transition from outdated to modern warehousing facilities in India presents significant opportunities. CLI’s logistics platform, Ascendas Firstspace, launched in 2017, has expanded rapidly, now boasting over 11 million square feet of operational assets and even more in development.
The company is looking to adopt a two-pronged approach, which includes both developing new properties and acquiring ready-made assets to enhance its portfolio. The growing demand in the e-commerce sector is a major driving force behind this anticipated expansion.
Diversification into New Sectors
CLI is also entering the data center market, recognizing its increasing importance for digital infrastructure. With multiple data centers under development across India, CLI aims to cater to the demands of global-scale cloud computing providers. This move is part of a broader strategy that also includes plans for renewable energy and private credit investments, both of which complement its existing operations.
Conclusion: A Bright Future Ahead
CapitaLand Investment’s strategic expansion efforts in India signify a commitment to tapping into the country’s fast-paced economic growth. With considerable plans for infrastructure development and diversification into emerging sectors, CLI seems poised for success. They are creating a robust foundation that will not only solidify their position in India but also align with their broader aspirations for growth by 2028 and beyond.
With the combination of operational expertise, strong investor backing, and extensive plans for expansion, CLI is well-positioned to navigate potential market challenges and seize the unfolding opportunities in India.
