After building one of India’s largest commercial real estate portfolios, Blackstone may be preparing for a different kind of property play.

The US investment giant, which plans to double its India investments to $100 billion over five years, could increasingly look beyond office parks and malls to rental housing, data centres, industrial estates and other emerging asset classes. Some executives believe it could get there well ahead of schedule, according to a report by The Financial Express.

Real estate accounts for more than $30 billion of the $50 billion Blackstone has invested in India so far. It will remain central even as the firm scales up private credit, infrastructure and energy. The world’s largest alternative asset manager, with around $1.4 trillion in assets under management, has already shown it can build and monetise large property portfolios here.

“Over the next seven to 10 years, India will double its GDP, and we will need a lot of capital. I feel Blackstone will hit $100 billion much earlier,” said Chanakya Chakravarti, former head of indirect strategies for Asia-Pacific at Ivanhoé Cambridge and a senior corporate adviser.

Blackstone built its India business by assembling office portfolios with developers such as Embassy, K Raheja Corp, Sattva and Bagmane. Including its partners’ share, the portfolio peaked at around 150 million sq. ft. It then monetised these assets through REITs.

It has since exited Embassy Office Parks REIT and Mindspace Business Parks REIT, and recently sold a stake worth around $1.3 billion in Knowledge Realty Trust. Executives see the exits not as a retreat but as the playbook at work: build, list, redeploy.

It has also diversified into malls through Nexus Select Trust, hotels through Ventive Hospitality, formed with Panchshil Group, and warehousing through Horizon Industrial Parks. The next leg, executives say, could be data centres, rental housing, student accommodation, co-living and industrial parks. In these businesses investors keep the asset and collect rent, rather than build and sell.

Rental housing may be the most intriguing bet as India’s big cities swell and demand for professionally managed homes grows. Blackstone is a big rental landlord in the US, where Blackstone Real Estate Income Trust owned about 275,000 rental housing units as of June last year. In India, its main residential bet is a 40% stake in Pune-based Kolte-Patil Developers.

“Residential was not viable for global funds earlier. Now a lot of cities with populations of more than 10 million have emerged where they can invest. Rental housing can be a big opportunity,” said Sanjay Dutt, former MD and CEO of Tata Realty and Infrastructure. He believes Blackstone could eventually explore a residential REIT.

Shobhit Agarwal, chief executive –investment banking at Anarock Capital  said Blackstone could reuse its office model. Just as it partnered developers in Mumbai, Bengaluru and Pune to build offices, it could team up with residential builders to create large rental platforms.

The hurdles are low rental yields, a lack of institutional scale and, crucially, exits. “Blackstone takes positions in assets, holds them for five years and can list them as a REIT, riding a 10-year cycle. In residential, assets are built and sold immediately,” said a senior private equity executive, who requested anonymity.

Data centres and industrial parks

Data centres offer a quicker route to deploying capital. Blackstone, with its partners, owns AirTrunk, which earlier this year announced plans to invest more than $30 billion to build over 5 gigawatts of capacity in India by 2030. They fit Blackstone’s taste for large, long-income assets, though they demand heavy spending on power and cooling.

“I think there will be an explosion in data centres in the next two to three years, and Blackstone can tap the growth easily,” Chakravarti said.

Industrial parks could follow warehousing. “Manufacturing has started in a big way in the country. Mostly, we have seen warehousing centres as of now. Large industrial parks can follow,” Dutt said. Estates that house factories rather than storage could give Blackstone large portfolios with long-term tenants as India courts global supply chains.

Private credit

Blackstone has hired former Deutsche Bank executive Apurva Shah to help build its India private credit and insurance business. It arrives after Apollo, PAG, Davidson Kempner and Deutsche Bank have already done sizeable deals in the country’s  private credit market which is estimated at $12 billion a year .

“It is preposterous to say they have missed the bus. Though they are late, they can still do big things. They don’t enter a segment unless they think it is deep enough,” the private equity executive said. “At Blackstone, cheques don’t start at ₹100 crore. They start at $100 million.”

Chakravarti sees the biggest demand among developers. “Most developers understand only credit, not equity,” he said. He expects refinancing to pick up as post-Covid borrowings fall due, with companies also seeking acquisition finance and structured debt as they look beyond bank lending.

Blackstone launched an Asia-Pacific infrastructure platform earlier this year and appointed Ami Momaya to head infrastructure in India. Executives expect it to target energy and transport assets with predictable cash flows, using the same approach as in offices.

“They could invest and hold assets, create alpha and exit through an InvIT,” the private equity executive said. Infrastructure investment trusts do for roads and power lines what REITs do for offices. How fast it moves will depend on finding suitable assets at sensible valuations.