Trikona Capital, which manages real- estate funds in India, plans to invest as much as $5 billion in the world’s second-most populous nation to build homes, hotels and offices in the next seven years.
Trikona, which also manages an Indian real-estate fund for Trinity Capital Plc, will build as many as 20 townships in India with an average area of 1,000 acres each, Aashish Kalra, managing director, said in a phone interview in New Delhi. The total investment in building the townships, including funds from partners and developers, will be about $50 billion, Kalra said.
Economic growth and rising incomes are spurring demand for homes, offices and shopping malls in India. The $854 billion economy, Asia’s fourth-biggest, has expanded an average 8.6 % since 2003, the quickest pace in the country’s history since independence in 1947, putting more disposable income in the hands of its citizens to spend on homes and cars.
Indian wages may increase an average 14.5% in 2007, the fastest among Asian nations, from 14.4% last year, according to consultant Hewitt Associates Inc.
“About 50 million households will move to urban centers for jobs and will seek housing,” Kalra said. “That’s more than the existing housing stock in major cities.” The Asian Development Bank estimates India will need as many as 10 million new housing units a year by 2030.
Rising income and rapid urbanization has fuelled demand for housing in cities such as New Delhi, Mumbai and Bangalore, where prices have more than tripled since 2004.
Trikona plans to tie up with US developers to build these townships. The company plans to start construction of the first township by the end of this year, Kalra said. The townships will come up on the outskirts of major cities, he said.
Sustained economic expansion is also fueling demand for commercial buildings and hotels as companies such as Citigroup Inc. and International Business Machines Corp. expand in the nation of more than a billion people.
The fund manager plans to invest in building hotels and hospitals across the nation. Trikona plans to build at least 10,000 hotel rooms in India, including 1,500 rooms in Mumbai, over the next seven years, Kalra said.
Trikona has already invested $100 million each in building homes, commercial spaces and hotels in India, Kalra said. India’s real-estate industry, estimated at about $12 billion, is growing at 30 % a year, according to an Ernst and Young study for the Federation of Indian Chambers of Commerce and Industry.