Indian property developer Rustomjee plans to build data centres in Mumbai, the nation’s largest real estate market, to ride the artificial intelligence (AI) boom while it continues to sell luxury homes, according to a top executive.

The data centres will be developed across five million square feet of land in Thane, a suburb of Mumbai, where the company holds an “economic interest”, Chandresh Dinesh Mehta, an executive director of Keystone Realtors Ltd, said in an interview.

Rustomjee, the brand of publicly listed Keystone, plans to get a strategic or financial partner for the project, he said. It currently has a residential township in Thane through a partnership that is 49%-owned by Singapore’s Keppel Land Ltd, a unit of Keppel Ltd. 

“We feel that data centres are going to be an asset class, and there is play that is possible,” Mehta said. Thane is “strategically located, where you have fibre connectivity and availability of power”, he added. 

India’s data centre capacity has nearly doubled since 2019, drawing interest from a wide range of investors, according to a report from Avendus Capital. Mumbai alone is expected to add 40% in new capacity in the next five years, the report said. 

Real estate investment trusts and companies that have data centres have seen their share values surge this year as they provide key infrastructure for widespread AI adoption.  

Keystone, which hit a US$1 billion (RM4.34 billion) valuation this year, began in 1995 in the affordable housing segment in Dahisar, a distant suburb of Mumbai. By 2001, its Rustomjee brand had started taking over residential buildings from owners, rebuilding them and constructing more apartments, Mehta said. 

The developer is also betting on appetite for second homes, with the launch of its villa township in Kasara, located about 100km from Mumbai. “Customers want green spaces and homes where they can spend holidays with their family and friends,” Mehta said. 

Given the ageing buildings and “zero supply of open spaces” in Mumbai city and its suburbs, redevelopment will continue to be a focus area for Rustomjee, and it has no plans to invest beyond the city and its surrounding areas. 

“More buildings are discussing redevelopment post Covid, when people were stuck at home and realised homes were not only places to sleep, but to work, study, entertain and spend more time,” Mehta said. 

Last year, Bollywood producer Dinesh Vijan reportedly bought three floors in Rustomjee’s new redevelopment project in the upscale Pali Hill neighbourhood for over one billion rupees (US$12 million or RM51.72 million), according to local media. Mehta declined to comment on the transaction, but said such pricing was not unusual. 

Any real estate purchase of at least 200 million rupees “is not a one-off transaction in Mumbai, unlike in Bangalore or Chennai”, he said. “I have enough headroom in Mumbai.”

Source: Theedgemarkets

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The premium France pays to borrow is the “new normal” as the nation’s finances deteriorate, according to Pacific Investment Management Co (Pimco).

The extra yield investors demand to hold French bonds versus German debt is hovering around 70 basis points amid the ongoing political confusion and budget concerns since President Emmanuel Macron held a snap election in June.

The spread reflects “the increased fiscal uncertainty,” Nicola Mai, sovereign credit analyst at Pimco, told Bloomberg TV.

While Macron is expected to name the next prime minister in the coming days, the centrist government that likely emerges will be “weak” and faces “tough” negotiations with the European Commission in the fall, Mai said.

Finding a new head of government is increasingly urgent as France prepares next year’s budget. A caretaker administration has governed since the election in June and investors are watching closely after sending French borrowing costs soaring on concern a new administration won’t control the nation’s large fiscal deficits.

According to research by Bloomberg Economics, the French yield will hold north of 70 basis points through 2024 before widening significantly in 2025. Though borrowing costs will drop as the European Central Bank cuts rates in the coming months, riskier French bond yields won’t decline as much as safer German bonds in 2025, the research predicts.

The spread between French bonds and German debt blew out in June to the widest since the euro-area debt crisis in 2012. The premium was below 50 basis points before Macron called the snap vote.

Despite the challenges faced by France and other European countries managing their debt burden, Mai said he sees a low risk of another sovereign debt crisis in the region.

“The fiscal infrastructure has improved. The ECB has asserted its role as a lender of last resort,” Mai said.

“Nonetheless, I think fiscal dynamics are challenged in several countries apart from Germany. We’ll see a bit of a higher credit spread, including France.”

Source: Theedgemarkets