(May 6, 2014) — APG, which invests more than €350 billion for Europe’s largest pension fund ABP, has committed to an Indian real estate co-investment to expand its foothold in the increasingly economically important region.
The investor, and a consortium of other unnamed pension funds, has teamed up with emerging markets investment firm The Xander Group, the partnership announced this week.
The group has committed $300 million to a venture that will buy “income-generating, institutional-grade commercial assets across India’s main office markets”. The consortium could increase the budget to $500 million, should opportunities continue to present themselves.
The venture will solely focus on built and leased office assets in Mumbai, National Capital Region of India, Bangalore, Hyderabad, Chennai, and Pune.
“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. “This, combined with limited new development starts for office projects in India, creates a unique demand-supply gap for good quality office space that our venture aims to target.”
In 2012, APG invested in two large Indian real estate ventures. It partnered with Godrej Properties to invest $140 million in residential properties targeted at the country’s growing middle class. It also took a 6% stake in mid-range hotel operator Lemon Tree, aimed at this increasingly economically significant part of India’s population.
APG is one of several investors interested in India. Last year, Canadian High Commissioner Stewart Beck told Indian officials his country’s pension funds wanted to invest in the burgeoning economy.
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