Volvo India, the Swedish multinational best known for heavy-duty trucks and sleek low-chassis buses, is set for a landmark real estate transaction in Bengaluru.
The company is in the final stages of negotiations with Bangalore-based real estate developer, the Bagmane Group, to buy as much as one million sq ft of fully fitted out office space for a record Rs 700 crore (Rs 7 billion).
Volvo India, which offers a range of buses, trucks and construction equipment, currently has six different office spaces in Bengaluru.
This move would see them consolidate in one location at the Outer Ring Road in Marathahalli, in the eastern part of Bangalore, which houses many technology companies.
In addition to various operational personnel, Volvo has a growing technology arm here, which is part of its global operations.
A Volvo India spokesperson, while confirming they were exploring options of consolidating their office space, added they were in discussion with various developers, including the Bagmane Group, but had not finalised the deal.
“It is not yet before the Board and we have not finalised the spread of office space or how much we would be spending for it,” the spokesperson told Business Standard over phone. However, two senior investment bankers who specialise in the real estate space, said the deal had been finalised and the formalities were being sewn through.
This move comes as a breather for the real estate sector, waiting for buyers and lessors as companies are turning cautious in a environment which makes large commitments risky.
Cushman & Wakefield, the global real estate advisory firm, said in its recent report that the office market segment in India registered a 15 per cent drop in absorption in the first half of the year (Jan-June), at 10.9 million sq ft.
“Slower economic growth led to the decline in expansion by companies as cautious sentiments continued since the beginning of the year.
“While the skepticism was very apparent in the first quarter of the year, the second quarter saw a marked improvement in total office space absorption,” the report added.