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Axis Commercial Real Estate Fund has announced its first close after raising nearly INR400 crore through a strategic partnership between Axis Asset Management and global real estate firm Tishman Speyer, according to anonymous sources. The fund is a category II alternate investment fund (AIF) that will develop greenfield commercial projects across eight key markets in India, including Chennai, Ahmedabad, Kolkata, Hyderabad, Pune, Mumbai, the National Capital Region, and Bengaluru, with a focus on sustainability, safety, and serviceability. The fund aims to raise up to INR1,500 crore, including a green-shoe option, and will offer leveraging margins at the development stage in the commercial real estate project lifecycle.
The alliance between the fund house and international real estate major Tishman Speyer is the first of its kind in India. Tishman Speyer will act as the exclusive development manager for the platform, while Axis Commercial Real Estate Fund will have end-to-end control over the project lifecycle, from design and development to leasing and property management. The fund, with its development partner, will own the project special purpose vehicle, which will in turn own the land, building, and the asset. The fund intends to utilize construction finance and lease rental discounting up to optimum limits to support the projects.
The joint investment and development platform is seeking to take advantage of the strong demand for office space, substantial growth seen in global capability centres, and the flight-to-quality phenomenon among leading occupiers. The commercial real estate market in India, which was hit severely by the Covid-19 pandemic, made a strong comeback in 2022 with steady recovery in demand for office spaces across key cities. 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 and is second only to the 2019 net absorption numbers for the past 10 years.
Industry experts and investors are confident in the long-term potential of the commercial real estate segment. The last six to eight years have seen significant activity and deepening of secondary markets in commercial real estate through participation by both institutional and retail investors. The demand pipeline for office real estate and pre-commitments continues to be healthy and is expected to drive performance further in 2023.
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