GIC Pte, Singapore’s sovereign wealth fund, and Ascendas Pte plan to invest as much as S$600 million ($483 million) in Indian real estate to meet rising demand for commercial property.
The companies set up the Ascendas India Growth Programme with a target size of S$600 million with GIC being the principal investor, they said in a joint e-mailed statement today. The fund will invest in business space in Bangalore, Chennai, New Delhi and surrounding areas, Hyderabad, Mumbai and Pune, according to the statement.
Institutional investors are increasing allocations to real estate as part of efforts to diversify portfolios and boost returns. The value of investments by state funds like GIC in alternative assets including property rose 26 percent in the past year, Invesco Ltd. said in September, citing a survey of 29 sovereign funds controlling about 80 percent of the assets.
“The likes of Blackstone Group LP, Ascendas, Xander Group Inc. and GIC are among investors who are looking at putting together a string of commercial assets,” Shashank Jain, executive director of transaction services at PwC, said in a phone interview from Mumbai. “They are looking at a stable yield-generating asset portfolio.”
Investing in alternative assets like real estate “stems from their potential to generate high long-term real returns and their role of diversification in the portfolio,” GIC said in its annual report published in August. The firm, which in March 2011 opened its India office in Mumbai, has already invested in properties in New York City, Jakarta and London this year.
GIC is part of a group that’s buying the headquarters of Time Warner Inc. in New York City, a person with direct knowledge of the transaction said last week. The state fund said last month it signed a pact to buy a 47-story office tower in Jakarta’s central business district. It also was the purchaser of Blackstone’s stake in London’s Broadgate office complex, two people with knowledge of the transaction said in August.
Ascendas, based in Singapore, develops and manages business space, according to the statement. The company manages the Ascendas Real Estate Investment Trust, the Ascendas Hospitality Trust and the Ascendas India Trust.