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 through the first close of the fund, said persons with direct knowledge of the development.
The category II alternate investment fund (AIF) is Axis AMC’s alliance with Tishman Speyer to develop commercial office properties across key cities of India while emphasising on sustainability, safety and serviceability.
Through this first ever alliance in the country between a fund house and an international real estate major, Axis Asset Management Co is raising up to Rs 1,500 crore including a green-shoe option, while Tishman Speyer will act as the exclusive development manager for the platform.
“In its first close, Axis Commercial Real Estate Fund has received a total commitment of Rs 400 crore. The initial close includes Rs 150 crore commitment from Axis AMC and Tishman Speyer, apart from investments from family offices, HNIs (high networth individuals), NRIs (non-resident Indians) and so on,” said one of the persons mentioned above.
Axis CRE Fund’s strategy is to primarily develop greenfield commercial projects across key eight markets of the country including Mumbai Metropolitan Region, the National Capital Region, Bengaluru, Hyderabad, Chennai, Pune, Ahmedabad and Kolkata.
The fund is planning to offer leveraging margins at the development stage in the commercial real estate project lifecycle.
The specially curated platform by Axis AMC and Tishman Speyer intends to invest in early-stage greenfield commercial real estate projects across these key markets, aiming to develop Grade A office buildings to be leased to established and large corporate occupiers.
Tishman Speyer will act as the exclusive development manager for the platform, while the Axis Commercial Real Estate Fund will exercise end-to-end control on the project lifecycle across design, development, leasing and property management.
The fund with the development partner will own the project special purpose vehicle, which in turn will own the land, building and the asset. The fund intends to utilise construction finance and lease rental discounting up to optimum limits to support the projects.
The joint investment and development platform is looking to take advantage of strong demand for office space, substantial growth seen in global capability centres (GCCs) and the flight to quality phenomenon observed amongst the leading occupiers.
The commercial real estate market that was hit drastically by the Covid-19 pandemic has made a strong comeback in 2022 with steady recovery in demand for office spaces across key cities of India.
India’s office market net absorption across the top seven cities for the full year rose 46% to 38.25 million sq ft, a three-year high. The performance has surpassed the five-year pre-pandemic average (2015-2019) by 3.1% as well and is second only to the 2019 net absorption numbers for the past 10 years, showed data from JLL India.
The office property market has not only shown resilience but also overcame the pandemic-driven challenge of the work-from-home model and emergence of hybrid work format to register a record performance.
The demand pipeline for office real estate and pre-commitments continues to be healthy and is expected to propel the performance further in 2023.
Industry experts and investors are confident of 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 participation by both institutional and retail investors.