BANGALORE: Emerging markets investor Xander and Dutch pension fund APG have partnered for a Indian venture that would deploy $300 million (or Rs 1800 crore) to buy tenanted office spaces across the country's top metros.
The new entity India Office Venture, in which APG has put in a substantially amount of funding, would see its capex increase to $500 million if the scope for buying opportunities of office spaces in the country also rises.
Bulge bracket global investors like Blackstone and Canadian Pension Plan Investment Board have been committing significant capital to snap up rent yielding office buildings that provide steady returns in an otherwise volatile Indian real estate market.
Asia's third largest economy has more than 360 million A-grade office space with technology off-shoring and services sector being the big clients.
Rohan Sikri, partner at Xander Investment Management, said, "developers these days are not in the business of owning large commercial assets for the long term, and our purchases will depend of what the market has to offer"". Since 2005, Xander has invested $1.4 billion across various asset classes in India.
Blackstone has spent over $700 million in the last 24 months to gain control of about 21 million sqft of office space, which are either tenanted or nearing a lease deal. Qatar Investment Authority, the sovereign wealth office of the Arab state of Qatar had invested $300 million into Bangalore-based RMZ Corp, for a 24% stake in a special purpose vehicle that houses close to 8 million sqft of tenanted office space located in south India.
“In spite of the recent slowdown, India's top six cities have consistently witnessed the largest net absorption of office space in the Asia-Pacific region, and perhaps globally," said Sachin Doshi, head of non-listed Real Estate for Asia-Pacific at APG in Hong Kong.
Anshuman Magazine, CMD, of global consultancy and research firm CBRE believes that India's commercial office market is moving towards a mature growth curve, as is the case in most developed economies. Private equity firms, pension funds and REITs own close to 80% or more of the office space market in most mature markets around the world.