APG And Xander Buy Three Indian Shopping Centers

APG Asset Management, the Dutch pension fund, and The Xander Group, the investment firm, announced Friday (Nov. 4) the two have teamed up to acquire three shopping centers in India for $300 million.

According to a report by Reuters, APG Asset Management and Xander Group are co-investing $450 million in India’s real estate market, which will increase both companies investments there. The $300 million went for the three shopping centers in India, while the remaining $150 million was to buy or build new retail real estate. APG is investing 77 percent of the money, while Xander is investing the rest, Reuters reported, noting that, in 2014, the two companies created a $300 million venture to invest in commercial office space in Indian cities.

While eCommerce is growing all over the world, private equity firms, including Xander, have been looking to purchase malls in the Indian market, which is characterized by fast growth. The investors are betting Indian residents will come to the stores in droves, particularly as more foreign brands open and online retailers pull back some of their very aggressive discounting, noted the report. “It is hard to recreate the physical experience online,” said Sachin Doshi, managing director and head of private real estate investment for Asia-Pacific at APG, in the report.

According to Reuters, in India, consumer spending is on track to top $3.6 trillion by 2020. Brands, including IKEA, H&M and Gap, are eyeing the market in part because of new rules that let stores stay open 24 hours a day. That’s attractive to investors because there is a lack of high-end malls at a time when there is growing demand from retailers. Reuters pointed out that, in some malls in India, retail rents have jumped as much as 20 percent during the last year. Shopping center yields in India are around 11 percent, which compares to 4.9 percent in Singapore and 4 percent in London. Reuters cited Jones Lang LaSalle for that data.