How can a real estate fund be successful?
It is important to have a clear strategy for the fund,” says Karan Bolaria, CEO, Godrej Fund Management. “Strategising well increases the chances of success of the fund; it involves deciding exactly what sort of real estate you will invest in by pre-identifying micro-markets with high potential and then using a strong asset selection framework to zero in on deals to fund.”
“Discipline in portfolio construction is also very important; it appropriately distributes risk,” adds Bolaria. “Imposing caps on a fund’s exposure to a single market or deal ensures that any one segment is not over-leveraged.”
Currently, Godrej Fund Management invests equally in the residential and commercial segments and, within these, in clearly defined niches.
“Our investments in residential realty are primarily in projects for the middle classes; this is an area we understand well, in which we have proven management capabilities,” says Bolaria. “In the commercial space, we invest in high-end offices for industries other than information technology; essentially, premium spaces that may be challenging to execute with a special focus on sustainability.”
Monitoring the use of funds also contributes to their success.
“We monitor the execution of projects by analysing propriety as well as third-party data to make sure we are staying with the original plan,” says Bolaria. “We enter into regular dialogue with the project teams. And while we stay out of residential operations, we do get involved whenever the project encounters a hurdle.”
- CHARU BAHRI