New Delhi: In what appears to be the country’s single largest real estate investment, funds managed by ICICI Venture and Tishman Speyer, along with Nagarjuna Construction Co. Ltd, plan to spend $2 billion (Rs8,824 crore) on a 400-acre township in Hyderabad .
TSI Ventures, the joint venture between ICICI and Tishman, recently won the Tellapur project after it bid Rs4.215 crore per acre, slightly above the Andhra Pradesh government’s reserve price of Rs4 crore per acre. While 33 companies were shortlisted, only TSI bid, agreeing to pay Rs1,686 crore for the land.
As part of the agreement, the developers will also give the state government about Rs50 crore in revenue each year for five years. The project is currently 74% owned by the private equity funds and the remainder will be held by Nagarjuna. The transaction will be financed by a mix of equity and debt and may include overseas borrowings.
The business plan submitted to the Hyderabad Urban Development Authority has estimated the sale value of the property, on completion of the multi-year project, to be around Rs10,000 crore, Y.D. Murthy, vice-president at Nagarjuna, said.
The township will be a mix of commercial and residential complexes as well recreational space. Tishman Speyer will design the township and TSI Ventures will manage the project.
TSI Ventures is a joint venture between ICICI Venture, India’s largest private equity fund and New York-based Tishman Speyer, which has acquired, built or developed more than 76 million sq.ft across the US, Europe and Latin America , and owns iconic buildings such as the Rockefeller Center and Chrysler Building in New York.
India’s real estate market is expanding at an unprecedented pace, with construction being the second largest economic activity after agriculture. The real estate market in India is growing at about 30% per annum and is estimated to touch $50 billion by 2010, from about $12 billion now, driven mostly by a growth in the information technology sector, which has created more jobs and the need for large office complexes and homes.
Rahul Chandran contributed to this story