Real estate developers in north India are again aggressively scouting for funds for the completion of residential projects announced much earlier.
New Delhi-based realty firm Parsvnath Developers Ltd (PDL) has raised Rs.100 crore by selling 49.9% stake in a housing project at Ghaziabad to private equity (PE) firm SUN-Apollo India Real Estate Fund LLC. The 31-acre housing project “Parsvnath Exotica” is being developed by its subsidiary Parsvnath Buildwell Pvt. Ltd.
In another development, Red Fort Capital Advisors Pvt. Ltd is close to investing Rs.150 crore in the “Esencia” township project in Gurgaon of Ansal Properties and Infrastructure Ltd.
“While we may see a steady flow of PE transactions in real estate this year, many of them will be in projects that have garnered good amount of pre-sales and are already in the development mode,” said Adhidev Chattopadhyay, analyst, Edelweiss Securities Ltd. “Both these investments have been in the better projects of the developers, who both have large tracts of land.”
In 2010, about $1.5 billion (around Rs.6,800 crore today) was invested across 46 deals in the real estate sector compared with $749 million across 23 deals in 2009, according to Venture Intelligence, a research firm which tracks PE deals.
An estimated $400 million across 11 deals was invested in real estate projects in north Indian market last year over an investment of $100 million in five deals in 2009.
“With banks reluctant to refinance loans, developers would have to opt for such high-cost funding, because they also need to retire debt,” said Chattopadhyay.
The premium apartment project Parsvnath Exotica in Ghaziabad was launched in May 2007 and was scheduled to be completed last November. The developer was not able to sell more than 50 units in the project after its launch till the middle of 2010, according to data provided by PropEquity Analytics Pvt. Ltd, a Gurgaon-based property research firm. Mint couldn’t independently confirm this.
Parsvnath, which currently has a debt of Rs.1,100 crore, part of which it plans to retire by the end of 2011, also raised Rs.75 crore from SUN-Apollo in 2009 for its “Exotica” project in Gurgaon.
“There is no delay but we want to fast track the completion and delivery of the Ghaziabad project with the funds,” said Pradeep Jain, chairman and managing director, Parsvnath Developers.
An email sent to SUN-Apollo remained unanswered until late Tuesday.
Subhash Bedi, managing director of Red Fort Capital said that the firm is close to investing in the second phase of Ansal’s project Esencia but refused to give further details.
Anil Kumar, chief executive Officer, Ansal Properties refused to comment on the deal.
Red Fort invested Rs.250 crore in 2010 in two projects, said Bedi.
It also won a Rs.1,651 crore bid for the 32-acre Delhi rail land plot with Parsvnath last year.
Launched last May, Ansal Properties’ Esencia is a 112-acre township that will be developed in phases. The project will offer plots of various sizes, villas, floors and group housing apartments.
An investor presentation on Ansal’s website says that the developer has sold 0.98 million sq. ft of space in the project for Rs.174 crore as on 31 March 2010.
As reported in the September quarter, the company has a debt of Rs.1,350 crore.
Source: Livemint