Investors - OCTOBER 12, 2017

Allianz creates $500m India-focused fund

by Andrea Waitrovich

Allianz has partnered up with Indian Sharpoorji Pallonji Group to establish a fund worth $500 million, targeting the office market in India.

Allianz will own 50 percent of the investment, with the remaining half held by other long-term institutional investors.

SPREF II has plans to build a portfolio of office properties in Mumbai, Bangalore, Hyderabad, Pune, Chennai, and the Northern Capital Region. Allianz is looking at both stabilized assets and develop-to-core and forward purchases. This first real estate transaction in India is part of the group’s strategy to invest around 5 percent of its global real estate portfolio in the Asia-Pacific region.

The deal by Allianz, a global real estate player, is the latest in a series of high-profile investments into Indian real estate by institutional investors this year. Recent transactions include Singapore sovereign wealth fund GIC’s $1.4 billion joint venture with DLF Cyber City Developers for a portfolio of office and retail assets across India in August; Canadian Pension Plan Investment Board’s investment of $500 million in a joint venture with Indian property developer Indospace in May; and Blackstone’s investment into K Raheja Corp’s Mindspace business park portfolio in March.

“We’re seeing a significant rise in demand for Indian real estate opportunities,” said Stuart Crow, head of Asia Pacific capital markets, JLL. “International investors — particularly pension funds and insurance companies — are looking to expand into new markets, and India’s growth story is very compelling. With the country’s growing technology and e-commerce sector, this is creating demand for both office space and logistics facilities, something that investors are keen to be part of.”

Rushabh Desai, CEO of Allianz Real Estate Asia Pacific, noted, “We are looking to deploy approximately 60 percent of our Asia-Pacific allocation to growth economies. The Indian economy has been consistently outperforming. Strong secular growth, stellar demographic trends, and improving transparency are supporting stable real estate occupiers as well as investor demand, in particular the office sector which is ideal for global long-term investors like Allianz.”

The World Bank has projected 7 percent growth in GDP for India for 2017–2018. According to JLL’s latest City Momentum Index, six Indian cities are in the world’s top 30 in terms of speed of economic and real estate development, with Bangalore ranked at number one.

Based on JLL’s Global Capital Flows data, India was among the best performing countries in Asia Pacific in Q3, as investor confidence remains buoyed by government initiatives.

“The Indian government has laid out policies and incorporated various modifications in the last two and a half years to improve transparency in real estate along with making it easier for foreign capital to enter the Indian real estate market,” says Shobhit Agarwal, head of Capital Markets, JLL India.

Mumbai, NCR and Bangalore are the top three cities for investors. “These cities have received more than two-thirds of total investments,” says Agarwal. “Sector-wise, capital is going into office — core and core plus — and residential assets under development.”

In addition, government initiatives such as the Goods and Services Tax increase the need for integrated logistics services and improve interstate transportation of goods, giving the sector a boost. India’s logistics market is expected to grow to $307 billion by 2020 according to data from The Associated Chambers of Commerce and Industry of India.


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