British investment management group Protego Real Estate Investors LLP said on Thursday it hoped to raise up to $400 million of equity to launch a speculative Indian office development fund.
The Protego WIRE Indian Office Development Fund has been designed in joint venture with WIRE Commercial Partners, a unit of Singaporean property services company WIRE Group.
The closed-ended, seven-year fund will invest primarily in office development projects in tier one and tier two cities in India.
It said it hoped to raise $150 million of seed equity by the end of the fund's first closing in February. Protego is targeting net returns in the region of 25 percent.
The company also hopes to launch an Indian office investment fund by June 2009 to complement the development venture.This fund will have the option to acquire the completed developments at the market valuation and acquire other assets as appropriate.
“From a real estate perspective there is huge primary demand from international corporates for quality office space – driven primarily by the cost benefits from outsourcing global IT,” said Charles Weeks, head of business development at Protego.
It is estimated that demand for Indian office space will increase by between 30 percent and 35 percent per annum compounded “for the foreseeable future”, Protego said.
“One of the issues with investing in real estate in India is building a pipeline of deals that combine a high probability of closing while fulfilling the various criteria required by international investors,” said Iqbal Jumabhoy, chief executive officer of WIRE Group.
“WIRE has built a solid pipeline of projects and has identified a list of potential tenants to fill these projects,” he said.