Mumbai-based ASK Property Advisors Ltd, which recently marked the final close of its sixth residential realty fund, on Wednesday announced a joint investment with Bengaluru-based Shriram Properties Ltd for the sole development rights in an ongoing mid-income housing project in Chennai.
The investment will be made via the Rs 500-crore co-investment platform set up by ASK Property Fund and Shriram Properties, wherein the platform will invest about Rs 206 crore in the project – Shriram 122 West—being developed in Chennai.
These funds will be invested to complete the acquisition, the co-investment platform’s second joint bet, while the proceeds for the project’s working capital requirements shall be infused separately.
“The real estate market of Chennai is now experiencing exceptionally favourable conditions, with record-high absorption and the lowest inventory overhang in years. We are evaluating opportunities in recapitalization space or acquisition of value projects under the platform,” Lakshmipathi Chockalingam, Managing Partner - South, ASK Property Fund said.
ASK Property Fund is making the investment out of its recently closed investment vehicle Real Estate Special Opportunities Fund IV (RESOF IV), a Rs 1500-crore alternative investment fund (AIF).
The fund marked its final close in May after downsizing the fund’s corpus from Rs 2,000 crore earlier. Through this fund, it will finance mid and affordable residential real estate projects across key markets including Mumbai, Pune, NCR, Bengaluru and Chennai.
However, it is unclear what percentage of the corpus is being deployed by the two entities separately for the acquisition.
The project, Shriram 122 West, is a mid-income housing project located in Mangadu, near the Porur - Manapakkam IT cluster. The soon-to-be-launched project has a total saleable area of 1.9 million square feet spread across two phases.
Comprising about 1,900 residential units, predominantly targeting the mid-income group, the project has an aggregate revenue potential of Rs 1,200 crore over the next 5 years.
With this transaction, the co-investment platform, which had set out to jointly invest about Rs 500 crore in residential housing projects, has deployed about 60% of the total corpus as agreed by ASK Property Fund and Shriram Properties.
In the first joint investment, Shriram Properties and ASK Property Fund infused Rs 125 crore in a plotted development project, Golden Ira, which was being developed by the Golden Gates Group, in November 2022. The project, now called Shriram Pristine Estates, was launched in February.
Currently, the two entities are evaluating further to co-invest in plotted and residential development projects in Bengaluru, Chennai, and Hyderabad.
ASK Property Fund’s chief executive and managing director, Amit Bhagat, in an earlier interaction with VCCircle said that the firm, largely focused on mid-market and affordable housing segments, is bullish on residential and will likely continue its focus on this market.
“Residential was lucrative and will remain lucrative,” he had said, adding that ASK is unlikely to foray into commercial segment as there is stiff competition from deep-pocketed institutional players, limiting entry into the segment.
