Global funds keen on India’s commercial property sector

Collaboration facilitated by JLL for Shapoorji Pallonji with German Insurer; other global funds keen on India’s commercial property sector

Mumbai, 12 October 2017 

The real estate arm of German insurer and asset manager Allianz announced that 

it is partnering with Indian Shapoorji Pallonji Group to establish a fund worth US$500 million, targeting the office market in India. Real estate consultancy JLL advised Shapoorji Pallonji Group on the transaction.

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 US$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 US$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.

Shobhit Agarwal, Head – Capital Markets, JLL India said, “There has been increasing interest in Indian real estate opportunities and among international investors, pension funds and insurance companies are keen on participating in the Indian growth story. The e-commerce sector is generating demand for both office space and logistics facilities, and 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.” Mumbai, NCR and Bangalore are the top three cities for investors. “These cities have received more than two-thirds of total investments,” says Mr Agarwal. “Sector-wise, capital is going into office – core and core plus – and residential assets under development.”

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.”

Shapoor Mistry, Chairman – Shapoorji Pallonji Group said, “We view this partnership with Allianz as the first step in a relationship which will focus on creating long term value for the investors and will be supported by Shapoorji Pallonji Group’s substantial credentials and experience in delivering and managing real estate assets across key markets in India.”

India’s standout performance

The World Bank has projected a seven 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.

Mumbai, NCR and Bangalore are the top three cities for investors. “These cities have received more than two-thirds of total investments,” says Mr 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 US$307 billion by 2020 according to data from The Associated Chambers of Commerce and Industry of India.

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