Godrej Fund Management to raise $400-500 million early next year for another desktop fund


According to Colliers International, the commercial office segment in India continues to attract significant interest from investors, even in times of uncertainty around the remote working culture which is expected to continue through the end of 2020.

Godrej Fund Management (GFM), the real estate private equity arm of the Godrej Group, is looking to raise an additional $400-500 million through a new office fund early next year. Karan Bolaria, Managing Director and CEO of Godrej Fund Management, told FE: “Our AUM (assets under management) in our office platform has exceeded $1 billion. We plan to gradually raise $400-500 million. We are a well-capitalized group, so we will combine our own capital and raise more funds and deploy that money in Class A office buildings in the four cities where we operate”.

Remaining optimistic about the demand for office space outside of the IT and ITeS industry, Bolaria said that with the pandemic, occupants are interested in taking 20-25% more office space, in order to be able to maintain social distancing norms in offices. This will lead to more office space occupancy.

In anticipation of stable demand for Class A office space, plans to build a portfolio of office space are also underway. “We have approximately 4 million square feet of development under the offices. Of this number, just over one million square feet will become operational by December. The remaining 3 million square feet will become operational within the next 24 to 36 months,” Bolaria said.

Despite the uncertainty surrounding the future of office real estate, as companies suggest making working from home a permanent feature, most major developers are confident that demand for office space will only increase. FE had reported on August 12 that Tata Realty was not embracing the work-from-home culture and was planning a large office space portfolio – building 45 million square feet of office space over the course of 7-10 coming years. Bengaluru-based property developer Embassy Group has also said on different platforms that the take up of Class A office space will only increase in the coming years as occupiers consider dedensifying office space.

Admittedly, private equity investments in office space have also remained healthy so far in the year. According to Colliers International, the commercial office segment in India continues to attract significant interest from investors, even in times of uncertainty around the remote working culture which is expected to continue through the end of 2020. The segment attracted investment inflows of Rs 15 billion ($207 million) from 2020 to August, accounting for a 24% share of total investment.

Piyush Gupta, Managing Director (Capital Markets and Investment Services), Colliers International India, said: “The trade office will continue to drive investor demand for quality A-grade assets and with successful REITs established at depth. among institutional and retail investors. There will likely be increased demand for operating assets, which could extend to demand for warehousing/industrial, consumer and technology assets, such as data centers.”

Meanwhile, the impact of the pandemic has been felt in land prices for commercial real estate. According to Bolaria, there is a 10-20% correction in land prices from pre-Covid levels. GFM manages over $1 billion in capital across four funds across residential and office space. The two office funds include Godrej Build to Core – I (GBTC-I), a $450 million club-type office investment platform that is invested in the development of A-level office buildings on India’s major office markets. APG Asset Management, which has invested in funds previously managed by GFM, is GBTC-I’s anchor investor.

The other fund is Godrej Office Fund-I (GOF-I), a $150 million discretionary pool fund that is invested in core and plus office and retail properties across India.

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