Bangalore: Godrej Fund Management (GFM), the real estate-focused private equity arm of Godrej Group, has purchased a nine-acre plot of land in Mundhwa, Pune for just over ??300 crore, said two people familiar with the development.
The land, which was purchased from a local owner, has development potential of approximately 1.5 million square feet and will be used to build a commercial office project.
In January, GFM marked the first close of its $ 500 million office development platform, GBTC II, at $ 250 million. It raised $ 200 million from the existing investor, the Dutch company APG Asset Management NV, and $ 50 million from the Godrej group. It will increase the remaining amount over the next 12 to 15 months.
“The land was purchased at fair market value. In the recent past, a number of Mumbai and Bengaluru developers as well as global investors have purchased land in and around Pune primarily for office and warehousing projects and, selectively, for residential projects. also, ”said one person mentioned above, who did not wish to be named.
A spokesperson for GFM did not answer questions.
GBTC has a “club style” office investment strategy of buying land and developing office buildings in key cities.
The platform has a strong pipeline of investments and aims to deploy the new capital within 12 months, Karan Bolaria, managing director and managing director of GFM, said in January.
GFM will develop office buildings that will be valued at over $ 1.5 billion on completion and the total value of office buildings, including those from previous funds, will bring the portfolio value on completion to over $ 3 billion.
The average size of the projects will be around one million square feet each with an investment of around $ 100 million in equity.
The company is also working on a strategy whereby it will either go public through a real estate investment trust or REIT or hold these assets through a large private core fund.
Land prices in major real estate markets have come down and major developers are buying land very strategically, although the overall momentum compared to 2-3 years ago has dropped.
“Land prices in general have fallen by 10 to 20%. Today is a buyer’s market and struggling sellers are willing to give discounts. While the distress is visible, significant transactions have yet to take place, ”said Gulam Zia, Executive Director – Valuation and Consulting, Retail and Hospitality, Knight Frank India, a Real Estate Advisor.
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