Axis Commercial Real Estate Fund, a strategic partnership between Axis Asset Management Co and global real estate developer, owner and operator Tishman Speyer, has raised nearly Rs 400 crore as of the fund’s first closing, people with direct knowledge of the development said.
The Category II Alternative Investment Fund (AIF) is Axis AMC’s alliance with Tishman Speyer to develop commercial office properties in key cities in India, while emphasizing sustainability, safety and security. ease of service.
Through this first partnership in the country between a fund house and a major international real estate company, Axis Asset Management Co is raising up to Rs 1,500 crore, including a green shoe option, while Tishman Speyer will act as exclusive development manager for the platform.
“At its first closing, Axis Commercial Real Estate Fund received a total commitment of Rs 400 crore. The initial closing includes a Rs 150 crore commitment from Axis AMC and Tishman Speyer, plus investments from family offices, HNI (high net worth individual), NRI (non-resident Indian) and so on,” said one of the people mentioned above.
Axis CRE Fund’s strategy is to develop mainly new commercial projects in eight key markets of the country, including the Mumbai metropolitan region, the national capital region, Bengaluru, Hyderabad, Chennai, Pune, Ahmedabad and Kolkata.
The fund plans to offer leverage margins in the development stage of the commercial real estate project life cycle. The platform specially curated by Axis AMC and Tishman Speyer intends to invest in greenfield, early stage commercial real estate projects in these key markets, with the goal of developing Grade A office buildings for lease to large and established corporate occupants.
Tishman Speyer will act as the platform’s exclusive development manager, while Axis Commercial Real Estate Fund will exercise comprehensive control over the project lifecycle through design, development, leasing and property management.
The fund with the development partner will own the special purpose vehicle of the project, which in turn will own the land, the building and the asset. The fund intends to use construction financing and lease rent discount up to optimal limits to support projects.
The joint investment and development platform seeks to take advantage of the strong demand for office space, the substantial growth seen in global capacity centers (GCCs) and the phenomenon of flight to quality seen among the main occupants.
The commercial real estate market which has been drastically affected by the Covid-19 pandemic has made a strong comeback in 2022 with a steady recovery in demand for office space in key cities in India.
India’s office market net uptake in the seven major cities for the full year rose 46% to 38.25 million square feet, a three-year high. The return also outperformed the pre-pandemic five-year average (2015-2019) by 3.1% and is second only to the 2019 net absorption numbers for the last 10 years, according to data from JLL India.
The office real estate market has not only shown resilience, but has also overcome the challenge brought about by the pandemic of the work-from-home model and the emergence of the hybrid work format to record record performance.
The demand portfolio for office real estate and pre-commitments remains healthy and is expected to further boost performance in 2023.
Industry experts and investors are confident in the long-term potential of the commercial real estate segment. The last 6-8 years have seen significant activity and deepening of secondary markets in commercial real estate through the participation of institutional and retail investors.