The Hindu Business Line : Millennium Spire to invest $300 m in real estate projects

New Delhi, Sept. 24 With falling real estate values in the US and the downturn in Indian property market making local valuations more attractive, real estate fund Millennium Spire — part of the UK-based Millennium Group — is looking to invest $300 million into realty projects in India in the next 12-18 months.

“We have already deployed $52 million in four projects in India, and from early next year we will start to invest another $300 million into various projects. Although investing here is part of our larger strategy and that has not seen any change, across-the-board people are looking to diversify into markets such as India which are more stable. The key fundamentals of the Indian market are robust and the expectation and valuations now more realistic,” Mr Ashish Bhalla, Managing Director of Millennium Spire said.

Stating that the two years back the chances of finding ‘realistic valuations’ in Indian market were slim, Mr Bhalla pointed out that now the developers are more cautious about the projecting returns, even as they keep tight control over costs.

Fund raising

Millennium Spire is currently in the midst of active fund raising and the financial closure for the next round of investment is expected by October to December quarter. Millennium Spire, registered in Singapore, is an India focused real estate fund and has been operating in the country over the last 18 months. “The $52 million pilot fund has already been committed. We have deployed investments in a residential project in Gurgaon, a technology park in Manesar and we have two projects in Coimbatore — one mixed used project, and a textile, industrial SEZ project that has integrated residential development,” he said.

The fund does target its investments for primary purchase of land but in “brick and mortar ” model wherein it aligns with developers or land owners to partner in development of projects. “In the past we have picked up anywhere from 33 per cent to 50 per cent stake in projects. Ours is a five year fund with extension of another year,” he said.

Commenting on the $300 million investment kitty, Mr Bhalla said that the fund would be keen on investing in mixed use projects. “Mixed use projects are self sustaining units, and tend to be more viable in the context of FDI than standalone projects. We may look at same locations where we have already made investments…We could look at NCR, in and around Coimbatore, Hyderabad, Goa and Bangalore,” he added.

The average investments this time around would be $10-50 million, and the $300 million could be utilised for approximately 10 projects, he added. On the expected return on investments, Mr Abhijeet Bhalla, Managing Director, Millennium Spire said, “At the fund level, a 20 per cent net return for investors on equity is considered good for emerging markets. We are targeting over 25 per cent return.”

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