Brigade, Singapore's GIC form realty JV; to invest Rs 1,500 crore

KOLKATA: Bangalore-based real estate developer Brigade Enterprises and Singapore’s sovereign wealth fund GIC have decided to jointly investRs 1,500 crore in housing projects across south India, where the two partners will acquire land for residential and mixed use developments. “Our first project is a well-conceived, residential community coming up at Whitefield, Bangalore.

The joint venture will provide a platform for us to acquire and execute a series of similar projects in south India and further strengthen our partnership,” said MR Jaishankar, CMD of Brigade Group. In 2012, GIC’s affiliate, Reco Begonia entered into a partnership with Brigade Enterprises to develop a premium residential project on the plot at Whitefield Main Road in Bangalore.

The partners bought a 9.5 acre land parcel in Whitefield from HUL Rs 125 crore. Global PE funds are investing heavily in the Indian real estate sector and have been forming JVs to cash in on the growing real estate market. In February, Piramal Enterprises and Canada Pension Plan Investment Board agreed to jointly invest $250 million (about Rs 1,500 crore) in rupee debt financing against residential projects across major cities in India.

This was followed by Xander Group and a consortium led by APG Asset Management NV, a Dutch pension fund asset manager’s $300 million (Rs 1,800 crore) investment. The partners will jointly acquire FDI-compliant office buildings in India’s biggest cities.

According to Cushman & Wakefield’s report for the second quarter of 2014, the domestic real estate sector saw investments totalling Rs 4,950 crore in the first six months of this year, the highest level since the first half of 2009. Of the total PE inflows in H1, the housing segment accounted for nearly 60%, at Rs 2,357 crore. Office assets contributedRs 1,435 crore and retail Rs 300 crore.

“The increase in investments during 2014 was primarily due to high transaction activity in the residential asset class as well as steady acquisition of leased office assets by foreign funds.

The residential asset class requires large amount of funding to meet the shortfall in residential units and PE funds have developed into an important source of capital in recent years,” says the report.