New York-basedVornado Realty Trust, one of the largest owners and operators of office buildings in the US, and Delhi-based builder Uppal Group will jointly finance a 263-acre tax-free enclave in the Capital’s suburb Gurgaon in a bid to tap India’s booming real estate market.
With a total investment of Rs5000 crore, the enclave will house information technology and other service businesses, a spokesperson for the Uppal Group said.
Vornado will take a 50% stake in the project, according to people close to the transaction, who did not wish to be identified. Vornado couldn’t immediately be reached for comment.
The project will be paid for through a combination of debt, internal accruals and equity from both companies.
“This is a very mature fund and has very high credibility in the US,’’ said Jones Lang LaSalle country head Vincent Lottefier. “To see it entering the Indian market can only be positive.”
India is developing special economic zones, or areas that offer tax holidays, a move to stoke economic development and employment across the country. A total of 237 SEZs proposals have been formally approved, and about 50 have been notified.
Most such townships have a mix of residential and commercial facilities, making it an independent, fully functional community. Still, some of these projects have been halted in states such as West Bengal after farmers protested the forced acquisition of land by the state government, which they accused of offering inadequate compensation.
Private players such as Reliance Industries Ltd, who are developing such zones, are buying land directly from farmers.
The Indian real-estate market has been growing by about 30% a year and about $10 billion (Rs44,000 crore) of foreign investment is expected to enter the sector through private placement in the next three to four years, according to Jones Lang LaSalle.
The Uppal spokesperson declined to give further details about the project or its financial arrangement with Vornado. Manish Uppal, managing director of Uppal Group, was travelling in the US and couldn’t be reached for comment.
The Uppal Group also builds residential complexes, luxury hotels, information technology parks, commercial plazas and farmhouses. The company’s real estate division staff increased to 300 people in December from 120 a year ago period.
Vornado, a publicly-traded real-estate investment trust, has a portfolio of about 60 million sq. ft, mostly in Washington D.C. and New York, where it owns many of the office buildings surrounding the Penn Station railway hub. The company also owns a third of US retailer Toys “R” Us.
(Monica Gupta contributed to this story)