Godrej to raise $500 million from global investors

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Godrej Fund Management (GFM) to raise a $500 million office fund from global investors. Godrej’s new fund comes at a time when India’s commercial office market has been hit due to the Covid19 pandemic but continues to attract long-term investor interest. GFM is a real estate-focused private equity branch of the Godrej group. They have decided to raise a $500 million fund by early next year to invest in office properties, and is in talks with global investors, said Karan Bolaria (Company’s managing director and chief executive). Last year, GMF had raised $450 million which was built to core office development fund, besides a $150 million office investment fund, which has been fully deployed. 

Godrej’s plans are a blessing to India’s commercial office market as they have suffered due to the Coronavirus pandemic, but continues to attract long-term investor interest. Godrej has continued to be bullish on the office market. They have ramped up their office platform rapidly and will expand it further. There has been a shortage of quality Grade A office space but Bolaria believes that the clients will work from offices and take up more space as a risk-free measure. 

GFM’s existing investors include Allianz Real Estate and Dutch pension fund APG Asset Management. They have invested in six properties across Mumbai, Delhi, Bangalore, and Pune. They have more than $1 billion in assets under management. The plan for the new fund focuses on the 4 key markets, buy land, and build office properties as said by Bolaria. 

Work from Home (WFH) setup has divided companies over its long-term sustainability as a solution. The impact of WFH on corporate real estate may not be on a long-term basis and may not result in significant cost savings by companies, especially in the IT sector as stated by a Property advisory set up namely, Knight Frank. This sector has been one of the leading in encouraging employees to continue to work from home. They have been the key driver of India’s office market contributing nearly 45% of cumulative office space demand between 2010-2019. 

Land prices have gone down by 10-15%. There are now good opportunities to invest money. Landowners are now willing to negotiate prices due to the current situation. The new fund scheme of Godrej has also seen a high level of interest from overseas investors. 

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