The Hindu Business Line : Cushman & Wakefield plans private equity fund

CUSHMAN & Wakefield plans to set up a private equity fund in 6-10 months for the India and China markets, for which it is in talks with major private equity investors, according to Mr Michael W. J. Thompson, Group CEO, Asia-Pacific, Cushman & Wakefield.

The company, a global real-estate consultant, is planning acquisitions in India to scale up operations. Indian operations contribute about 10 per cent of its global turnover.

Mr Chanakya Chakravarti, Joint Managing Director, Cushman & Wakefield, said it would look at acquiring BPO companies to service the mid-segment market. He said a company could grow organically up to a point but the next stage of growth has to be through acquisitions.

Mr Thompson said though the opening of foreign direct investment (FDI) into real estate is an excellent step, there is a need for private domestic real estate mutual funds, which do not exist as of now.

Private domestic real estate mutual funds would ensure that significant capital flows into the sector; it would provide opportunities for domestic investors to invest in commercial real estate and accelerate growth.

Mr Thomson said there are a number of investment and pension funds that have resources for large investments but have very little avenues for investment. Once these domestic real estate mutual funds are in place it could provide an opportunity for these foreign funds to invest into Indian property markets.

More FDI would bring significant opportunity for developers to tie up with foreign players to access better quality capital, and to borrow international know-how in development. However, there would be more pressure on the Indian developers to corporatise and improve transparency in their practices and finances. This would result in increased availability of long term, cheaper capital for real estate development.

Most foreign developers would look for long-term, sustainable real estate development opportunities to exploit their ability to raise cheaper, long-term capital. This would ease the liquidity conditions in the market, and make more development finance available in the system. Talking about the Chennai market, Mr Thomson welcomed the initiatives of the Tamil Nadu Government to attract big-ticket investments. Chennai needs to position itself against Shanghai and other such cities in the region.

The advantages of Chennai are the large well-educated labour pool and its proximity to the port and airport. There is also a need to go outside the city to build world-class infrastructure, he said.

It is expected that the office space demand in Chennai will grow at over 40 per cent over the next two years.

Currently, there are transactions adding up to over 1.5 million sq.ft. in the pipeline.

The residential market is poised for a major growth in Chennai on the back of expected quantum jump in the end-user demand. The prices of good quality residential properties are expected to steadily increase over the next 24 months.

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