Financial Daily from THE HINDU group of publications
Sunday, Feb 19, 2006
Financial Daily from THE HINDU group of publications Sunday, Feb 19, 2006 |
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Industry & Economy
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Real Estate & Construction Markets - Mutual Funds Equity funds eye realty sector in a big way To explore investments in residential, commercial projects Moumita Bakshi Chatterjee
New Delhi , Feb. 18 PRIVATE equity investment in realty is set to witness hectic activity in the coming months with top funds betting big on India. Warburg Pincus, TSI Ventures and CIG are now aggressively exploring investment opportunities in residential and commercial projects as well as in hotels and service apartments over the coming months. "We are looking at investing between $1.5 billion and $2 billion over the next 3-5 years in commercial, residential, and integrated townships," Mr Prakash Gurbaxani, CEO of TSI Ventures, said on the sidelines of Realty 2006 International Conference organised here by the Confederation of Indian Industry. The fund is likely to make its first investment in 3-6 months, into a mixed-use project. "We will be looking at seven cities including Mumbai, Delhi, Pune, Bangalore, Hyderabad, Chennai and Kolkata," he said. Private equity firm Warburg Pincus - which has an $8-billion worldwide fund - has also initiated a dialogue with players for pumping in money into the real estate sector in India. "We have not earmarked any specific amount for investments in Indian realty opportunities and the criteria for our investment would be the quality of the developers. We have a strong interest in doing business in India," the Warburg Pincus India, Vice-President, Mr Niten Malhan, said adding that the firm would explore opportunities to invest both in projects and real estate companies. CIG Realty Investors (India), a Unitech Promoter group company, plans to line up a $100-million or so war chest for investing in real estate projects. "Our domestic fund, which is less than $100 million, is expected to be operational in 3-4 months. We are also planning a larger international fund, which may be close to $400 million in size," a senior CIG official said. The fund would invest in residential, commercial office space, IT and ITES projects, hotels and service apartments. The real estate market in India is on a high growth curve, on the back of a booming economy, favourable demographics and liberalised FDI regime. A recent report by PricewaterhouseCoopers estimated that the sector would attract $7-8 billion over the next 18-30 months. "Over the past six months, about $500 million has already flowed into the real estate sector," it had said. The current real estate boom in India is riding on low interest rates, modern attitudes to home ownership (the average age of a new homeowner is now 32 years compared with 45 years a decade ago), economic prosperity along with a change of attitude amongst the young working population from that of "save and buy" to "buy and repay".
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