India's Piramal plans $2 bln bet on property sector revival
Its planned investment could help developers complete commercial and residential projects left unfinished
Nov 06, 2014
Source : Reuters


Mumbai: India's Piramal Enterprises Ltd plans to invest $2 billion in real estate projects over the next two years, betting that a revival in the economy under a new government will boost demand for property, its billionaire chief said.

Its planned investment could help developers complete commercial and residential projects left unfinished when they ran out of money and banks cut back on credit to a sector badly mauled by a slowdown in Asia's third-biggest economy.

"We are more optimistic about the sector this year compared to last year because of a stable government and the overlying expectations for the economy to perform better," Ajay Piramal, chairman of the diversified company, told Reuters.


Home sales have come to a halt as high inflation and interest rates deter buyers, pushing up the stock of unsold inventory.

In the region around the capital, New Delhi, the inventory pile-up could take 53 months to clear at the current pace of sales. In India's leading metropolitan areas, including financial capital Mumbai, it would take 35 months, according to Mumbai-based firm Liases Foras.

Many property firms are scouting around for new sources of funding, with banks unwilling to lend more to the debt-laden sector and the weak financial situation of many developers making equity offerings unattractive.

Indian and foreign investors have become cautious on real estate after two years of less than 5 percent economic growth. Private equity investment in the sector dropped to $1.6 billion last year from $1.95 billion in 2012, according to research firm Venture Intelligence.

A Reuters poll of economists last month forecast the economy would grow 5.5 percent in the current fiscal year to March and 6.4 percent the following year as Prime Minister Narendra Modi pushes through reforms to attract investment.

"The banks are not still increasing their allocations to real estate. Since banks are not increasing and demand for money is there, the NBFCs (non-banking financial companies) and PEs (private equity firms) are busy of course, more transactions are happening," said Amar Merani, CEO of Xander Finance Private Ltd, part of The Xander Group, an emerging markets investment firm.

Piramal, known for identifying new investment opportunities and whose moves are closely watched by bankers and investors, said his company was looking to put money into both residential and commercial projects.

It makes real estate investment through debt, equity and structured finance routes.

In February, it tied up with the Canada Pension Plan Investment Board, which manages Canada's national pension fund, on a $500 million fund to finance residential projects in India.

Latest Realty News

Unitech group firm sells six realty projects for Rs 1,850 cr
Nov 06, 2014
Gurgaon: Unitech Corporate Parks (UCP), the London listed Unitech group firm, said that the company had completed a deal to sell its stakes in six IT-SEZ projects in India
Home sales plummet 25% in September quarter: Liases Foras
Nov 06, 2014
NEW DELHI: Home sales across top six cities in the country saw a quarter-on-quarter drop of 25% in the September quarter
Land rights for Bangladeshi migrants in Chhattisgarh
Nov 06, 2014
Raipur: Chhattisgarh government has granted permanent patta (land deed) of 99 years to the 134 families who had migrated to India in mid sixties
Absence of Master Plan mars Bihar Realty Sector
Nov 06, 2014
Patna: Bihar Government’s lackadaisical attitude towards formulation of a Master Plan for last 40 years has taken a toll on the state’s real estate sector
‘Policy problems plague realty sector in Bihar’
Nov 06, 2014
Patna: A few black sheep are tarnishing the entire clan, says Builders' Association of India (BAI), Bihar chapter, chairman Sachin Chandra
Japanese co to build houses in India in JV; to invest Rs 6k cr
Nov 06, 2014
New Delhi: In the first Japanese entry into the Indian property market, Tama Home announced construction of 12-18 projects at an investment of Rs 6,000 crore
Ponzi scam: CBI arrests 2 Odisha businessmen
Nov 06, 2014
Bhubaneswar: CBI arrested two businessmen associated with real estate for their alleged links with Artha Tatwa (AT) group
Record 815m sq ft of flats unsold in 6 cities
Nov 06, 2014
MUMBAI: The stagnant property market has led to the highest ever unsold stock of 815 million sq ft of residential space across six cities at the end of the September quarter this year
Sebi-DLF case: SAT allows realty major to redeem Rs 1,806 crore worth mutual funds
Nov 05, 2014
MUMBAI: In an interim relief against Sebi order, realty giant DLF was today allowed by the Securities Appellate Tribunal to redeem mutual funds worth Rs 1,806 crore till next month
High costs, low returns inhibit developers about malls
Nov 05, 2014
New Delhi: Developers across the country are shying from building malls due to high land costs, spurt in property prices and saturation of the market

Latest Realty News Of State

Realty Talk's