Mumbai: The Hinduja Group India, which is in businesses ranging from banking to automobiles, plans to develop 4,000acres of land held by its listed units for residential and commercial use, under a company called Asiaa Property Development Ltd, joining a slew of business houses looking to cash in on a real-estate boom in the country. It’s also talking to private equity players interested in partnering the group in this venture.
“We have about more than 4,000 acres of land in various companies that are listed,” said Prabal Banerji, group president (finance) for the Hinduja Group India. “We are trying to get it under one umbrella where all the real-estate activities will be concentrated in a focused manner.” The Hindujas already have a real-estate division that develops land and manages construction, which will be folded into Asiaa. No information was available on the extent of the activities of this unit.
“Most of the land is in tier 1 cities,” said Dheeraj Hinduja, president of the group. “This (land development) is an activity in the making for the last six to eight months. The business plan is still being finalized and I wouldn’t like to quantify the amount of investment.”
The Hindujas’ land bank would count among the some of the bigger ones held by Indian firms. For instance, Delhi-based real-estate firms DLF Ltd and Unitech Ltd have land banks of 10,255 acres and 10,900 acres, respectively. Others such as Sobha Developers have reserves of 2,747 acres.
With real-estate prices rising 200% in India’s tier 1, or top, cities in the past two years, Indian business groups such as chemicals firm DCM Shriram Consolidated Ltd and the Wadia Group, which owns the Bombay Dyeing clothing company, have forayed into real-estate development, although on a smaller scale. Both intend to develop around 100 acres each. Construction activity grew by double digits rates last year helping the Indian economy expand at 9.4%.
“There are six to eight overseas private-equity companies, some of the top ones in the world, who are negotiating with us to come into this sector,” said Banerji. “We are in talks with various kinds of players in the real-estate sector and would bring them only as a balancing figure for raising funds,” he added. Banerji declined to elaborate.
The Indian realty sector is forecast to grow to $90 billion (Rs3.7 trillion) by 2015 from $12 billion in 2005, according to Merrill Lynch. This, and rising prices in the sector, have prompted a number of foreign private-equity firms such as Trinity Capital Plc. and Wachovia Corp. to invest in real estate. Private-equity investment in real estate has increased from a negligible amount in 2005 to about $1.1 billion in 2006, and $680 million between January and April 2007,?says?a?recent?report?by?audit firm Grant Thornton India.
Shabana Hussain in Delhi contributed to this story.