BENGALURU: Godrej Fund Management (GFM), the real estate-focused private equity arm of the Godrej Group, plans to raise a $500 million fund by early next year to invest in high-rise buildings. offices and is in talks with global investors, said Karan Bolaria, managing director and chief executive of the company.
A year ago, GMF raised the $450 million Build to Core office development fund and a $150 million office investment fund, which have been fully deployed.
Godrej’s move comes at a time when India’s commercial office market has taken a hit from the covid-19 pandemic, but continues to attract interest from long-term investors. “We remain bullish on the office market. We have rapidly grown our office platform and will continue to expand it. There is a shortage of good quality, Grade A office space and we believe that despite the work from home (WFH) trend, clients will work from desks and take up more space as a mitigation measure risks,” Bolaria said in a phone interview.
Current investors in GFM include Dutch pension fund APG Asset Management and Allianz Real Estate. He has invested in six properties in Pune, Bengaluru, the National Capital Region and Mumbai. It has over $1 billion in assets under management. The new fund’s strategy remains focused on the four key markets, buying land and building office buildings, Bolaria said.
“Land prices have corrected by 10-15% and there are good opportunities to deploy cash. Unlike before, landowners today are willing to negotiate prices. The new fund has also attracted strong interest from overseas investors,” he said.
GFM’s key strategy is to buy land and build, but it can make an exception to acquire a ready office building depending on opportunity and value.
The new WFH scheme has divided businesses or tenants over its long-term sustainability as a solution. Real estate adviser Knight Frank India said in a September report that FMH may not have much impact on corporate real estate in the long term and may not result in significant savings for businesses, especially in the IT sector.
The sector, which has been at the forefront of encouraging employees to continue working from home, has been the main driver of the Indian office market, contributing almost 44% of the cumulative demand for office space between 2010 and 2019.
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