Reliance AIF Asset Management has planned to enter commercial realty market by raising Rs 1,000 crore rental yield fund.
The fund is expected to come from several domestic and offshore investors and planned to be invested in office projects with buying and selling activities in various key cities to have regular rental income and capital appreciation.
Reliance AIF Asset Management, which is a unit of Reliance Nippon Life, looks confident to raise the capital as Indian residential market is slowing down with weak sales and uncertainty over recovery that eventually will prompt developers to shift their focus to commercial office sector.
The commercial office market in India has observed stable lease rentals and reasonable valuation with decent absorption levels but an insufficient supply. Moreover, many of the global investors have shown interest to buy or sell office in India. There are no development risks involved in owning and leasing out Grade A commercial office assets, as per the opinion of Shahzad Madon, Head of Portfolio Management Services & Alternative Assets, Reliance Nippon Life Asset Management.
“This asset class offers periodic rental income typically higher than that generated on bonds, along with significant potential for capital appreciation on exits.” He added.
According to the few analysts, the new funds will have the first-mover advantage. With Reliance’s strong pipeline of transactions, the company expects to complete its first closing soon and at the same time, they can start deploying the capital.
Source: Live Mint