(July 2, 2012) — The asset manager to the largest pure-play pension fund in Europe has announced a boost to its Asian property portfolio with a push into residential housing in India’s burgeoning business-focused cities.
APG, which was spun out of pension fund ABP in 2009, is to lead a consortium of investors in a project to build accommodation for India’s growing middle classes in three of the country’s largest cities.
Godrej Properties, the developer on the project, has targeted Mumbai, National Capital Region of India, which includes Delhi and adjoining urban areas, and Bangalore as initial hotspots. Pune and Chennai may also attract investment from the developer and consortium on an opportunistic basis, APG and Godrej said today.
Sachin Doshi, senior portfolio manager for APG in Hong Kong, said: “In our view, these cities will continue to be long term beneficiaries of India’s urbanisation trends and also represent the deepest pools of residential demand in the country.”
India’s economy has seen significant growth, despite the global economic turmoil, but figures in the first quarter pointed to a slow-down. At a 5.3% growth rate over the first three months of the year, however, the prospects are considerably better than in Europe or the United States.
This latest push into residential property follows APG’s foray into a hospitality venture in India. In May, APG announced it had bought a 6% stake in Lemon Tree Hotels, a company offering the largest chain of mid-range accommodation across India.
Under the terms of the deal with Godrej, the APG-led consortium will commit 71% of capital – the rest being committed by the developer – and create a platform that should allow nimbleness to acquire targets and launch projects quickly.
The development platform will be initially funded with 770 Crore rupees – around $140 million.