DELHI: Private equity firm Golden State Capital (GSC) said it will set up a real estate investment trust (REIT) to spearhead operations in India. The company, which hopes to raise $500 million (around ?3,060 crore today) by listing the REIT in Singapore, intends to invest $1 billion over the next three years in stabilised offices that are FDI-complaint.
Additionally, GSC has also formed a joint venture with the Dabur promoter, the Burman family. Burman GSC will look for business opportunities in the realty space.
REITs are pooled investment entities where the corpus is invested primarily in completed, income-yielding real estate assets.
“We are still working out on whether the realty foray will be residential or commercial,” said Gaurav Pandey, Chief Executive of GSC.
“We are looking at an REIT listing of above $500 million,” Pandey said, adding the company may look at another joint venture post its listing.
Last year, capital market regulator SEBI had released draft guidelines for REITs that will enable them to list on local bourses. So far, REITs incorporated in Singapore have been investing in India.
GSC began investing in India in 2002 with construction of leased assets by recovering industrial buildings. In 2008, the company entered into a pact with realty investment firm Ascendas to develop a 62-acre IT SEZ in Gurgaon, near Delhi.
Pandey added the company is now looking at office assets in places such as Delhi-NCR, Mumbai, Bangalore and Hyderabad, which have been built and leased out. According to a report from real estate consultancy Jones Lang LaSalle, commercial real estate space is witnessing a change. Previously only institutional investors or heavyweight high net worth individuals were investing. Several retail investors are now getting into the office realty space.
There are three ways to invest in commercial real estate – directly buy office space from a developer, buy shares of a commercial developer from the stock market, or invest in a real estate fund focused on commercial real estate.
Today, even professionals like doctors, auditors, stock brokers and lawyers are buying commercial properties for investment and self-use.
Industry watchers note that the rental yield in commercial property is anywhere between 8-12 per cent.