The BHIVE Group, which has interests in co-working and a fintech investment platform for commercial real estate, announced the receipt of a commitment of Rs 240 Cr for its 400 Cr AIF Scheme - BHIVE Commercial Real Estate Opportunities Fund Series 1. BHIVE, a Commercial Real Estate operator will deploy this capital to curate prime commercial real estate properties as the office market rebounds strongly after the COVID-19-induced impact.
The category II close-ended fund will offer a unique opportunity to high-net-worth individuals (HNIs) and Family-Owned Businesses looking to participate in the commercial real estate growth story. This capital will be deployed into Commercial Office spaces and real estate which will enable BHIVE to create a world-class infrastructure for startups and IT Companies. This much-needed infrastructure will foster economic growth and employment opportunities for India's youth.
The fund is expected to have its first close by September 30th and has already received a significant commitment from global family offices and marquee business houses of India. The Fund will acquire fully completed commercial real estate properties at prime locations with clear titles and occupancy certificates, in a range of Rs 20-100 crores.
BHIVE with its proven acumen will ensure the leasing of the assets. The targeted Internal Rate of Return (IRR) is 20-24%, the strategy of the fund is to earn via capital gains during buying un-leased and selling leased property using its group capability.
An alternate investment fund is created as a privately pooled investment vehicle to collect funds from specific investors as per a previously defined investment policy. With the economy opening up post-COVID-19 induced pandemic, businesses are catching up the pace again resulting in greater demand for quality office spaces.
According to international property consultant CBRE, leasing activity grew by almost 61% Q-o-Q and 220% Y-o-Y, reaching an all-time high of 18.2 million sq. ft. in Q2 2022. Absorption in H1 2022 more than doubled on an annual basis to touch 29.5 million sq. ft, indicating strong occupier intent.
“Commenting on the launch of the company’s new offering, Shesh Rao Paplikar, Partner BHIVE Fund said, “As the country leaves behind the impact of COVID-19, economic activity has picked up the significant pace with domestic and global companies looking to make fresh investments in India. This bodes well for the commercial real estate segment and is an opportune time to invest in the sector to reap rich dividends with high demand for quality office space.”
Over the years BHIVE group has shown proven expertise in generating good income out of office space real estate. We decided to take the value one step further by doing a backward integration in terms of acquiring office space assets through the fund. This way our fund investors will be able to gain from our 8 years of experience in office space leasing.
To enable Indian HNIs to actively participate in the commercial real estate growth story, we are pleased to launch our AIF II close-ended fund which will offer an opportunity to acquire quality assets in prime locations and also earn significantly high returns. With a low entry ticket size of Rs 1 crore, we are enabling Indian investors to acquire a share in prime office space which otherwise would have been out of bounds for them.”
According to the industry average, investments in commercial real estate yield a return in the range of 8-11% as against 2-3% returns in residential real estate. In contrast, BHIVE’s AIF II is helping customers generate double the yield of 20-24% with relatively low investment risks, which is a first in the industry. Since the capital is deployed in fully completed properties with all approvals, the risk to principal invested is also low. There is no construction or approval risk which was the bane of Real Estate Investment schemes launched by other funds earlier.
