Dubai-based Al Fajer Properties said it is in talks with two unidentified Indian developers to form a joint venture for an investment of up to $1 billion (Rs4,100 crore) in Indian real estate.
The company said it plans to develop commercial projects, gated residential communities and townships and has been considering locations in Gurgaon, Hyderabad, Gujarat, Mumbai and Chandigarh. It also wants to create a fund for small investors in India to invest in Dubai properties.
Al Fajer is one of a growing number of Dubai companies showing interest in Indian real estate. It is moving into India despite signs that the real-estate market is softening.
“We have been monitoring the Indian real estate and investment scenario for over two years now,” Shahram Abdullah Zadeh, Al Fajer Properties’ chief executive officer, said in an email. “Despite the current fluctuations in the real estate and property prices, our decision to enter this growth market is driven by our confidence in the strong economic fundamentals of India.”
The company did not offer any additional details including funding. Al Fajer currently has a portfolio of more than $1.5 billion worth of projects in Dubai.
The Al Fajer joint venture would not be the first cross-border partnership between developers in India and Dubai. Delhi-based DLF Ltd and Limitless LLC, a company owned by the Dubai government, recently announced that they had signed a joint venture to develop two townships in north and west India covering 40,000 acres. Emaar MGF Land Private Ltd was formed in 2005 between Emaar Properties PJSC of Dubai and MGF Developments Ltd in India. And Mumbai-based Hiranandani Developers Pvt. Ltd and Dubai-based ETA Star started construction late last year, on a 90-storeyed tower in Dubai that the developers say will be one of the world’s tallest residential buildings.
Gaurav Dani, a partner with G&D Law Chambers in Delhi, which specializes in cross-border transactions, said investors from Dubai and other countries have been looking for Indian development partners. But, deals often fall apart before they’re finalized. Foreign companies are concerned about cash property transactions and other shady practices that some Indian developers engage in. And many family-owned Indian companies are happy to take foreign money, but don’t necessarily want to give up control, he said.
“An Indian developer may be happy signing [an agreement] but when they see that the investor is dictating terms they may not want to go ahead with it,” Dani said. For Indian developers, the “real requirement is money.”