The land, which has been bought from a local landowner, has development potential of around 1.5 million sq ft and will be used to build a commercial office project
Bengaluru: Godrej Fund Management (GFM), the real estate-focused private equity arm of Godrej Group, has bought a nine-acre land parcel in Mundhwa, Pune for a little over ₹300 crore, said two people familiar with the development.
The land, which has been bought from a local landowner, has development potential of around 1.5 million sq ft and will be used to build a commercial office project.
In January, GFM marked the first close of its $500-million office development platform, GBTC II, at $250 million. It raised $200 million from existing investor, Netherlands-based APG Asset Management N.V., and $50 million from the Godrej Group. It will raise the remaining amount over the next 12-15 months.
“The land has been bought at fair market value. In the recent past, a number of developers from Mumbai and Bengaluru as well as global investors have bought land in and around Pune primarily for office and warehousing projects and selectively, for residential projects too," said one person mentioned above, who didn’t wish to be named.
A GFM spokesperson didn’t respond to queries.
GBTC has a ‘club-style’ office investment strategy that involves buying land and developing office buildings in key cities.
The platform has a strong investment pipeline and aims to deploy the fresh capital within 12 months, Karan Bolaria, managing director and chief executive, GFM had said in January.
GFM will develop office properties that will be valued in excess of $1.5 billion on completion and the total value of office properties, including those from previous funds, will take the portfolio value on completion to more than $3 billion.
The average project size will be around one million sq ft each with an investment of around $100 million equity.
The firm is also working on a strategy where it will take the portfolio public through a real estate investment trust or REIT or hold these assets though a large, private core fund.
Land prices in key property markets have reduced and top developers are buying land very strategically, though the overall momentum compared to 2-3 years ago has dropped.
“Land prices in general have reduced by 10-20%. It’s a buyer’s market today and sellers who are distressed are willing to give discounts. While the distress is visible, transactions in a big way are yet to happen," said Gulam Zia, executive director – valuation & advisory, retail & hospitality, Knight Frank India, a property advisory.