Kotak eyes ₹4,500 crore fundraise to deepen bets on India's real estate market

MUMBAI: Kotak Alternate Asset Managers, the alternative asset management arm of Kotak Mahindra Group, is looking to raise Rs 4,500 crore through its 16th real estate fund, as it seeks to deploy institutional capital across India’s expanding realty market through investments in residential, commercial and alternative property assets using a combination of debt and equity.

The target size of the fund, Kotak Real Estate Fund XIV, includes a green shoe option of Rs 1,500 crore and a sponsor commitment of 15%. The fund’s tenure will be seven years, with provisions for two one-year extensions. It will have an investment period of three-and-a-half years.

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“We will follow a hybrid strategy, investing in both debt and equity with no set allocation. We will look at opportunities across market cycles, providing growth capital to developers during expansion phases and addressing liquidity mismatches when needed. The timing and nature of investments will depend on the requirements of developers and the return potential of individual transactions,” Vikas Chimakurthy, CEO - Realty Funds, Kotak Alternate Asset Managers, told ET.

The fund expects to undertake a total 15-20 transactions while retaining flexibility to participate in larger or smaller transactions depending on the return thresholds.

The investment strategy will follow a hybrid debt and equity approach across real estate-backed assets, including residential, retail, hospitality, industrial and warehousing. Its primary geographical focus will be Bengaluru, Chennai, Hyderabad, Pune, Mumbai and Kolkata, along with potential opportunities in select tier II cities.

“Residential real estate is expected to contribute significantly to the portfolio’s value creation, given the size of the market. At the same time, we will evaluate opportunities across retail, hospitality, industrial and warehousing, depending on the risk-return profile of individual transactions,” said Chimakurthy.

Prior to this, similar funds managed by the firm have generated internal rates of return (IRR) of around 19%. Kotak Alternate Asset Managers has managed assets under management (AUM) of around $4.5 billion and reported zero credit losses since 2009, including through the global financial crisis, the Covid-19 pandemic and the NBFC crisis.

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Developers are increasingly turning to organised institutional capital for their funding requirements instead of relying on informal lending from high-net-worth individuals (HNIs) or capital markets, particularly amid subdued performance of recent initial public offerings (IPOs). Rising land acquisition and construction costs due to inflation are among the factors the fund will need to consider while evaluating investment opportunities.

The fundraise comes amid increasing institutional participation in India’s real estate sector. Institutional investments in India’s real estate sector reached $4.4 billion during the first half of calendar year 2026, registering a 25% year-on-year increase, according to JLL India. The period recorded 54 transactions, the highest number in a half-year period.

Domestic institutional investors accounted for 63% of total investments, with their capital deployment rising 165% year-on-year. Foreign institutional investments declined 35% amid global economic uncertainty. The office segment attracted 54% of total institutional capital during the period, reflecting continued investor interest in income-generating assets.