Last year, Mukesh Ambani’s Reliance empire acted as a lightning rod for foreign state-owned investors seeking exposure to India’s rapidly evolving consumer-led digital economy.

This year, it is the turn of bricks-and-mortar investment in retail and office space with publicly listed The Phoenix Mills Ltd (PML) attracting an influx of investment from Singaporean sovereign wealth fund GIC and Canadian public pension fund CPP Investments.

India’s retail and office real estate is increasingly attractive to SOIs, just as interest has cooled in European real estate markets. And the punishing impact of the pandemic on the South Asian giant’s economy has not dented enthusiasm for the potentially strong long-term returns from this fast-growing country.

This week, GIC agreed to take a “significant minority stake” in a US$733 joint venture partnership with the Indian developer for “retail-led mixed-use assets” that it will develop, own and operate. The assets will total around 3.4 million square foot of leasable retail and office space in Mumbai and Pune.

Kishore Gotety, Co-Head (Asia ex-China) of Real Estate, GIC, explained the rationale behind the investment: “We recognise that the unprecedented global crisis is impacting consumer sentiments and that the necessary lockdown has made it challenging for all businesses, especially those in the retail sector. However, the long-term structural growth that the Indian retail industry continues to offer due to favourable demographics, urbanisation, growing middle class, and increasing consumerism trends will still benefit the Joint Venture. We expect continued strong performance in the Indian retail sector as organised retail penetration increases and population density remains high.”

GIC is becoming a weighty investor in Indian commercial real estate. In December, it entered into an 80:20 strategic partnership with ESR Cayman to establish a US$750 million industrial and logistics platform. Seeded with 2.2 million square feet of a build-to-core asset near Mumbai, the JV aims to develop and own institutional-grade, "state-of-the-art" industrial and logistics facilities as well as acquire core assets, focusing on Tier 1 and Tier 2 cities across India.

The same excitement over Indian opportunities underpins CPP Investments’ decision to forge a US$155 million JV with PMLMindstone Mall Developers Private Ltd – in which it will have a 49% stake. The Canadian PPF is planning to develop a regional retail centre in Alipore, Kolkata with a potential total leasable area of around 1 million square feet, with completion set for H2 2024.

PML and CPP Investments are also extending their commitments to their current joint venture, Island Star Mall Developers Private Limited (ISMDPL), which was formed in 2017. Together they are investing a further US$110 million in the partnership in retail-led, mixed-use developments across India.

CPP Investments’ MD for Indian real estate, Hari Krishna, said: “India is one of the most important markets for us in Asia Pacific and a critical part of our long-term strategy. Working alongside reputed development partners such as The Phoenix Mills allows us to expand our portfolio and enhances our ability to deliver solid long-term risk adjusted returns to CPP contributors and beneficiaries.”

In April, the Canadian fund invested US$210 million in a joint venture with RMZ Corp to develop and own commercial office space in Chennai and Hyderabad. The deal was preceded by another Canadian fund, CDPQ, also backed office space development with an 80% stake in a US$180 million JV with Embassy via its real estate arm, Ivanhoé Cambridge. The Ivanhoe-Embassy fund will develop greenfield office projects across cities, but primarily in Bengaluru.