After big land buy, BPTP looks for investors

After big land buy, BPTP looks for investors
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First Published: Tue, Jun 10 2008. 11 19 PM IST

Future plans: BPTP’s office in New Delhi. The firm plans to build 5.22 million sq. ft of offices, 2.5 million sq. ft of retail space, and 1 million sq. ft of hotels and serviced apartments in three ph
Future plans: BPTP’s office in New Delhi. The firm plans to build 5.22 million sq. ft of offices, 2.5 million sq. ft of retail space, and 1 million sq. ft of hotels and serviced apartments in three ph
Updated: Tue, Jun 10 2008. 11 19 PM IST
Hong Kong: BPTP Ltd, which clinched India’s biggest land deal for $1.2 billion (Rs5,148 crore) in March, is looking for investors for a city it plans to build near New Delhi.
Future plans: BPTP’s office in New Delhi. The firm plans to build 5.22 million sq. ft of offices, 2.5 million sq. ft of retail space, and 1 million sq. ft of hotels and serviced apartments in three phases over about a decade
Some Indian developers have scoffed at what they believe was an exorbitant price for the 95-acre plot in Noida,a suburb of the Indian capital. And media reports have suggested the deal was in jeopardy because of a lack of funds.
But BPTP Ltd, which counts Citigroup as an investor, is pushing ahead with what it hopes will be the first top-notch business district in India by paying the first 25% instalment for the land this week.
“There were lots of rumours, people who wanted to turn a bad story on the company, but we’re definitely committed to the project,” BPTP’s 35-year-old founder and chief executive, Kabul Chawla, told Reuters in a phone interview from New Delhi.
Likening what he plans to build with Hong Kong’s skyscrapers linked by a maze of walkways, Chawla said the new city would be in the richest pocket of the New Delhi region and would attract top tenants such as banks and law firms.
“India lacks a true quality business centre,” he said. “Until now, no developer has had the opportunity to develop that concept into reality.”
Chawla, who began his career aged 22 by building an office block on an acre of his father’s land, said the land was relatively cheap at Rs1.3 lakh per sq. m. Smaller plots in Noida have been auctioned for four times as much.
“It’s only the most expensive land deal because it’s a big land deal,” Chawla said of the auction, in which BPTP outbid India’s biggest developer DLF Ltd and rival Omaxe Ltd.
BPTP raised funds for the land by selling stakes in four special economic zone (SEZ) projects for $160 million to Citigroup Property Investors, which owns 5.9% of the firm.
And Indian banks, which have been cutting back loans for property, are still keen to lend for construction of the Noida project, Chawla said.
But BPTP will soon look for new investors for the offices, hotels, shops and apartment blocks it plans to build on a town plan that will be drawn up by British architect Norman Foster. It plans to build 5.22 million sq. ft of offices, 2.5 million sq. ft of retail, and 1 million sq. ft of hotels and serviced apartments in three phases over about a decade.
“We’ll market the product in three months’ time and raise capital,” Chawla said. “We have the option of raising private equity money,” he added. “We’re flexible, we can sell the property to investors or end- users.”
BPTP needs to pay the balance for the Noida land plot over eight years, in $75 million instalments every six months.
Since India eased rules on inward investment in the construction industry in early 2005, foreign property investors have earmarked $20 billion for the country, igniting a boom that has seen property prices quadruple in many areas.
But private equity funds have complained that Indian developers slapped inflated price tags on themselves, their land and projects.
Government figures show only about $2 billion has actually been spent in the last three years.
However, plum deals are emerging as banks tighten lending to developers and a stock market slump shuts off public share offerings.
Among recent private equity deals, Parsvnath Developers Ltd sold a 30% stake in a Mumbai project to Euronext-listed Yatra Capital and Saffron India Real Estate Fund for $46 million.
Deutsche Bank’s property arm RREEF has taken a stake in unlisted developer Golden Gate and Morgan Stanley has bought into three developers.
As well as its deals with Citigroup, BPTP has also sold a stake in an information technology park to Merrill Lynch. The firm also wants to raise funds on the stock market.
“We definitely have plans to list ourselves, but we’re waiting for the right time,” Chawla said.
The failure of Dubai-backed developer Emaar MGF Land Ltd to push through a $1.6 billion initial public offering in January was a defining moment for developers.
Pune-based developer Vascon Engineers Ltd has since postponed its IPO and Unitech Ltd has shelved a planned $1.5 billion private placement, according to analysts.
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First Published: Tue, Jun 10 2008. 11 19 PM IST
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