The Hindu Business Line : Sistema plans foray into Indian real estate sector

Moscow, April 8 After entering the cellular services segment Russian conglomerate Sistema Group is now planning a foray into the booming Indian real estate sector.

The company is already in talks with Rajeev Mehrotra promoted Shyam Group to jointly develop land in Gurgaon with an initial investment of around $200 million.

The company, which had announced a turnover of $9.6 billion during the first nine months of 2007, is also scouting for other partners to foray into other Indian cities including Mumbai, Bangalore, Hyderabad, Chennai, Noida, Faridabad, Pune and Chennai.

Speaking to Business Line, Mr Sergey Shmakov, First Vice-President, Sistema Hals said, “Indian real estate market is very similar to Russian. Rental rates in Mumbai are at par with those in Moscow. India is our focus market.”

India will be the first real estate market outside Russia and Ukraine that Sistema will be foraying into.

Mr Yevgeny A. Kolodin, Vice-President, Strategy & Business Development, said that Sistema Group was still charting out its strategy for India.

“We are still deciding whether to take our real estate unit Sistema Hals or float a new subsidiary for India. Other than India, Sistema is also looking at China where the market is different but very attractive.”

Mr Kolodin said the Sistema was in discussion with Shyam Group to finalise the nature of the venture for the Gurgaon land.

Shyam, which is also Sistema’s joint venture partner for cellular services, owns 22 acres in Gurgaon.

"We plan to make it a mixed used project with commercial offices and maybe a hotel on this land. We find a lot of synergy between telecom and real estate business though these are handled by separate units of the Sistema Group," Mr Kolodin said at a Sistema sponsored media even in Moscow. Sistema is currently doing 39 construction projects in Russia through its real estate subsidiary Sistema Hals.

A number of foreign real estate companies have entered India in the past few years in a bid to take advantage of rising demand for commercial and residential space. When asked to about the impact of US recession on the Indian real estate market Mr Kolodin said that there are no indications of any significant impact on the demand and price.

Earlier Sistema had announced a $ 5 billion dollar investment in India for rolling out telecom services. The company has received CDMA spectrum for 3 circles and is on the verge of bagging a few more circles this month.

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