| With the real
estate sector being opened up for foreign investment,
private equity players are considering big investments,
banks are giving loans to builders, and financial
institutions are floating real estate funds in India.
According to
the new FDI policy, up to 100 % will be allowed
under automatic route in townships, housing, built-up
infrastructure and construction-development projects.
Construction projects would include hotels, resorts,
hospitals, educational institutions, housing and
commercial premises. The government has also reduced
the minimum mandatory area to allow FDI in real
estate sector from 100 acres to 25 acres.
International
investors like the US-based Warburg Pincus, Blackstone
Group, Broadstreet, Morgan Stanley Real Estate Fund
(MSREF), Columbia Endowment Fund, California Public
Employees’ Retirement System (CalPERS), Hines,
Tishman Speyer, Sam Zell’s Equity International,
JP Morgan Partners and Amaranth Advisors are said
to have evinced interest. A few funds belonging
to Warren Buffet’s Berkshire Hathway are also
said to be interested.
Several Indian
banks, who were previously shying away, are now
stepping up their exposure to real estate. Indian
institutions like HDFC, ICICI Venture and Kotak
Mahindra are launching funds to invest in real estate.
HDFC, in association with SBI and ICICI Venture,
has already launched a real estate fund for raising
$167 mn (Rs. 750 crore) with a greenshoe option
of $55 mn (Rs. 250 crore), while ICICI Venture is
also tying up with Tishman Speyer, one of the leading
owner-developer-operator of upmarket properties
in the world, to invest $450 mn in joint building
projects.
Most of these
funds have been meeting investment bankers, banks
and housing finance companies to get a feel of the
market. International developers, expected to bring
in at least $100 mn, are looking to tie up with
Indian companies, while the private equity funds
are keen to test the market with small investments
in big projects.
Houston-based
Hines- one of the largest privately held real estate
development, investment, and management companies
in the world- is in advanced talks to pick up a
51 % stake in the $1.1bn Mumbai Integrated Special
Economic Zone (MISEZ). New York-based TSP is the
first big US developer to take advantage of recently
relaxed foreign direct investment rules, which allow
100 % overseas investments in residential projects
on a minimum plot size of 25 acres and commercial
development of 50,000 sq. m.
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