Godrej Fund Management said it has hit the final close of a commercial real estate fund at $450 million (about Rs 3,200 crore at current exchange rates).
The real estate private equity unit of Godrej Group said in a statement it has brought in Allianz Real Estate, the property investment arm of Germany’s biggest insurer Allianz SE, as an investor in the fund.
The development signals continuing global interest in India’s commercial real estate market. It also shows Allianz's growing exposure to India.
The German investor had snapped up a commercial asset in India in November. The same month, it tied up with ESR Group, an Asian logistics real estate developer backed by private equity firm Warburg Pincus, to set up a $1 billion platform to invest in India’s logistics sector.
In October 2017, Allianz had partnered homegrown construction major Shapoorji Pallonji Group to create a platform for investing in India’s commercial real estate market.
In its latest move, Allianz has committed $150 million to the fund called Build to Core-I, Godrej Fund Management said.
The fund had earlier roped in APG Asset Management NV as a cornerstone investor, securing a commitment of $150 million in 2018. It invests in developing Grade A office buildings across India’s top cities. The statement said that the platform can now invest in or develop office assets worth over $1 billion in value.
With the latest fundraise, Godrej Fund Management’s assets in control have crossed $1.6 billion across asset classes.
The fund has secured two developments, one each in Mumbai and Gurugram, totalling two million square feet in total. The platform aims to fully deploy the capital within 12-18 months.
“We continue to believe in the long-term growth prospects of the Indian economy. Strong demographic trends and improving transparency are supporting real estate occupier as well as investor demand, particularly in the office sector, which is ideal for long-term institutional investors such as Allianz,” said Rushabh Desai, Asia-Pacific chief executive of Allianz Real Estate.
Godrej Fund Management manages two commercial and two residential real estate funds. Commercial entities Office Fund-I and Build to Core-I have corpus targets of $150 million and $450 million, respectively. Build to Core-I has achieved its corpus target.
The two residential real-estate funds – Godrej Residential Programme I (GRIP I) and GRIP II – are anchored by APG, a long-term partner of Godrej Properties.
Godrej Properties had set up its maiden platform of $200 million back in 2012. In 2016, it set up its second platform of $275 million. Subsequently, Godrej Properties spun off the realty investment arm.
Allianz’s investment in the Godrej fund comes at a time when a host of global investors are aggressively investing in the commercial real estate market. Xander Investment Management recently bought an office park in Pune for $130 million.
Among domestic fund managers, there are very few firms which are raising capital dedicated to the commercial real estate market. Indiabulls Real Estate Fund is currently raising a fund worth Rs 2,000 crore to invest in constructed and leased-out spaces.