CHENNAI: Kuwait's Islamic investment firm Hayat Invest will invest $100 million (about Rs 620 crore) in the Indian real estate sector in two years in partnership with Chennai-based residential real estate developer XS Real Group.
The investment, which comes at a time when the real estate sector is hit due to economic slowdown, will be made through a special purpose vehicle Jacaranda Properties that has been created for the purpose. It will be routed through Hayat's investment arm Ariston Hayat RE Assets Investment (Mauritius). The current investment will be one of the biggest investments in Chennai real estate.
Last year, Clearwater Capital, an investment firm focused on credit and special situations in Asia, and the Piramal Group's non-banking financial company, PHL Finance, jointly invested Rs 300 crore in a VGN Developers project.
The first project of the XS Real Group's venture will be a residential one spread over 1.5 million square feet at Siruseri, Chennai's IT corridor, which will come up in a phased manner over four years. It is expected to be launched in June.
Hayat Invest will initially invest $25 million (about Rs 155 crore) in two projects. The partners are still mulling over the location of the second project.
"This is just a beginning of the long-term partnership and the first Shariah- (Islamic law) compliant investment in Chennai. We do not go for debt and our projects are solely equity which made as a good fit for Hayat Invest philosophy," said SG Prabhakharan, chairman of XS Real Group. He also said there would be 1,500 apartments in all, costing Rs 20 lakh to Rs 50 lakh each.
The investment comes at a time when the Chennai residential market has taken a hit. According to property consultancy firm Knight Frank India, residential sales in the city dropped 33% in 2013 compared with 2012. This is also reflected in the investment appetite.
According to Venture Intelligence, there were four deals worth $64 million (Rs 397 crore) in 2013 in the Chennai real-estate market, and almost half of the $123 million (Rs 762 crore) it witnessed through five deals in 2012.
"Of course, there has been slowdown in India in the past couple of years due to global factors. But India is an emerging star and long-term prospects are intact," said Nabeel Al Mannae, founder-chairman of Hayat Invest. XS Real Group has already developed 2 million square feet of residential buildings.