Nitesh Estates and Goldman Sachs to jointly invest up to $250M in commercial real estate

Public listed real estate developer Nitesh Estates Ltd and global financial giant Goldman Sachs have signed an agreement to jointly investment up to $250 million in income-generating commercial assets, the company said in a statement.

In addition, it has invested $37 million for acquiring shopping mall Koregaon Park Plaza in Pune. The developer on Wednesday acquired the asset which has retail and office space with a total area of 1 million sq ft. This has enlarged the retail portfolio of the company to 2.2 million sq ft.

Nitesh Shetty, chairman and managing director, Nitesh Estates, said, “Like Koregaon Park Plaza, future target real estate investments will be in leased, income-producing A-grade office buildings and luxury commercial and hospitality facilities throughout India’s first tier cities."

Sonjoy Chatterjee, chairman, Goldman Sachs India, said: “We believe a cyclical recovery has begun in India. The new government is focused on boosting potential growth and removing bottlenecks, which will kick-start investment and consumption cycles leading to enhanced GDP growth. This announcement is consistent with our strategy to invest in sectors critical to India’s development.”

Goldman Sachs has been active in India across different sectors and has invested more than $2 billion since 2006. In the real estate space, it recently invested Rs 255 crore ($40 million) through an equity deal in Vatika Hotels, the hospitality arm of Gurgaon-based developer Vatika Group.

The tie-up marks another instance of real estate developers and funds joining hands for investment in the Indian real estate space. In September last year, Bangalore-based Brigade Group entered into a Memorandum of Understanding (MoU) with Singapore's sovereign wealth fund GIC to jointly invest up to Rs 1,500 crore ($247 million) in residential developments in select cities.

Early last year, The Xander Group Inc and an investor consortium led by Dutch pension fund asset manager APG Asset Management NV, created a $300 million (Rs 1,800 crore) venture to buy income generating, institutional grade commercial assets across India’s main office markets.

In 2013, CPPIB and Shapoorji Pallonji Group formed a strategic alliance to acquire foreign direct investment (FDI)-compliant office buildings in major metropolitan areas in India.

The developer, which is known for its luxury projects, has 21.2 million sq ft under various stages of development across residential, commercial, hospitality and retail and completed 13 premium residential, office and hospitality projects totaling 2.61 million sq ft as of December, 2014.

Focused on residential space in South India, the company has roughly 4 million sq ft of development in the pipeline. 

Private equity capital flow across residential and commercial real estate went up multi-fold to over $500 million in the first quarter of 2015, according to VCCedge, the research platform of VCCircle. The capital flow is expected to go up further as the outlook for commercial segment is positive. 

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