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HDFC Property Fund, the real estate investment arm of the HDFC Group, will invest ₹700 crore in four residential projects coming up in NCR, Pune and Bangalore. A total of 7,000 housing units will be built across these projects with a combined sales potential of ₹3,700 crore.
This investment will be made out of its second offshore fund, its final close at $250 million or ₹1,500 crore was announced by HDFC Property Fund about a fortnight ago. The fundraising exercise for the fund was concluded with investments from marquee international institutional investors.
DistributionThe four middle-income and affordable housing projects, in which ₹700 crore from this fund would be invested, are with Mahgun India developer in NCR’s Greater Noida area, Paranjape Schemes in Pune, and Sterling Developers and Vrindavan Tech Village owned by Embassy Property Developments in Bangalore.
Mahhagun’s Greater Noida property would be spread across 8 lakh sq ft and will involve an investment of ₹180 crore from the fund. In Paranjape’s 40 lakh sq ft project in Pune ₹200 crore will be invested. Vrindavan Tech Village, spread across 43 lakh sq ft, will utilise ₹220 crore from the fund.
The Sterling project will see an investment of ₹70 crore for the development of 5 lakh sq ft. A person privy to the development said: “The fund is eying an Internal Rate of Return of 23 per cent and will be looking at exit when projects reach a stabilisation stage at the end of four years in 2018. The entire tenure of the fund would be around 8 to 9 years.”
Raising moneyThough the first tranche of the second offshore fund of ₹1,500 crore has been raised, the company plans to raise an additional ₹900 crore taking the total planned fund corpus to ₹2,400 crore.
HDFC Property Fund’s first offshore fund called HIREF International with a corpus of $800 million was raised in 2007 and it is fully deployed now with one exit having been made. HDFC Property Fund, with a total asset under management in excess of $1 billion, had also launched two domestic real estate funds in 2005 with a corpus of ₹1,000 crore and ₹464.4 crore. The first fund has been substantially exited from, while the second is fully exited from by now.
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