Real estate ventures and mutual funds

Funds are thriving and fund action continues unabated in India’s booming real estate market. TSI Ventures, an equal joint venture between Tishman Speyer and ICICI Ventures, has mopped up over $1-billion, barely 15-months after it was floated.

This, while there are even more mega funds in Indian real estate’s pipeline. We have Actis looking at an India specific realty fund, and US-based Apollo Real Estate Advisors teaming up with Sun Group, just so they can pump in investments into the domestic real estate sector, a market which is probably, throwing up better yields than its peers amongst the emerging markets.

TSI Ventures multiple closing fund, which came into existence with $500-600 million, is currently seen to be crossing $1-billion, according to sources in the know. TSI, focussing on from the ground up projects, recently closed its first $100-million investment for 1.5-million sq. ft. project in Hyderabad. The fund is now closing in on deals in Bangalore, Chennai and Pune, one of which is a large integrated township.

Prakash Gurbaxani, CEO of TSI Ventures says his firm hopes to be managing and operating between 25,000 and 30,000-million sq. ft. space, both residential and commercial, over the next five to seven years. This could make it one of the largest real estate asset management entities in the country, as it targets a figure far bigger, than some of India’s largest realty houses have come up with, to date.

Meanwhile, UK-based private equity major Acentis bullish on the consumer products space, is exploring the possibility of an India-specific real estate fund. This fund could look at pure play realty, hospitality and tourism sectors. Currently, Actis operating the $500-million India specific fund, made investments and effected buyouts in the consumer products and services domain.

Last week, US realty major Apollo Real Estate Advisors forged a joint venture with Khemkas controlled Sun Group for its India foray with a $500-600-million fund, which could show up as nearly $1.5-billion in the future.

A group of former Morgan Stanley executives has floated $500-million India fund, Old Lane, for the infrastructure sector, which would also look at financing commercial real estate projects. The others exploring the domestic real estate action include London-based $300-million Duke India and a $100-million Saffron fund. The industry experts are hinting at cross-border fund flows of roughly $4-5-billion into the country over the next 12-18 months.

While, the fund action in realty is expected to gather momentum, with about 50-60 new ones India bound, questions are being raised on the investment avenues available in the country. Industry observers’ note, publicly listed realty stocks are far fewer in India compared to China and Hong Kong, even though the domestic market is better placed in terms of transparency.

That is nothing to get into a tizzy about, just as the Indian real estate market gains greater transparency, publicly listed realty stocks may soon match China’s and Hong Kong’s. Indian realty is the best bet for your bottom dollar!

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