The proposed investment will be in a commercial project in north Bengaluru spread over 10 acres with a development potential of 2-3 mn sq ft.
BENGALURU: Godrej Fund management (GFM), the real estate private equity arm of the Godrej Group has entered into a strategic partnership with the Centruy Group of Bengaluru to develop a commercial asset in a deal valued around Rs 700 crore.
The proposed investment will be in a commercial project in north Bengaluru spread over 10 acres with a development potential of 2-3 mn sq ft. “The deal is in the final stage of closure and will mark GFM’s foray in the commercial market in Bengaluru,” said a person aware of the deal.
Bangalore continued to be a dominant city in overall office leasing in the country, primarily driven by tech companies, followed by flexible space operators and engineering & manufacturing firms. The city contributed 27% of the total absorption in the first nine months of 2019.
An email sent to CBRE, advisor to the deal, Godrej Fund Management and Century Group did not elicit any response.
The money will be invested through the Rs 3200 crore built to core-1 office platform of the Godrej Group. The office project will also mark the beginning of partnership with both firms for multiple such opportunities. “The company are in talks for more projects. Centruy group has many strategic land parcels and local expertise. In some cases Godrej may also bring in equity and development capability,” said another person aware of the deal.
Century Real Estate, the firm with the largest land bank in Bengaluru, is foraying into commercial real estate, and is targeting a commercial portfolio of 7 million sq ft over the next five years. The initiative will see Century Real Estate build a Rs 2,000-crore office platform. “While the builder will contribute land and look into development, the prospective investor will bring in the initial Rs 1,000 crore,” its managing director told ET earlier.
Century Real Estate Holdings, which owns more than 2,500 acres of land across Bengaluru, is also looking to divest some land parcels and raise equity to generate liquidity. Besides, it plans to look at development in the affordable segment (Rs 50-60 lakh bracket), as the real estate market remains tepid.
GFM has a $450 million Godrej Build to Core – I (GBTC-I) and its $150 million Godrej Office Fund- I (GOF-I) office development funds. Jointly both the funds can invest and develop office assets worth over $1 billion in value.
The GBTC-I has APG Asset Management N.V. as cornerstone investor and is a ‘club style’ office investment platform that invest in developing world class, grade-A office buildings in leading locations across the key office markets of India. The other newly raised fund is Godrej Office Fund- I (GOF-I), a $150 million discretionary blind pool fund that will invest in core and core-plus office and commercial properties across India.
According to various industry estimates, the net office space absorption in the country is expected to record a new high of 42 msf by the end of 2019. Technology companies led the office space take-up in the country during the first three quarters of calendar year 2019, followed by research, consulting and analytics companies (19%) and flexible space operators (15%).