Wednesday, May 23, 2007

Funds continue to be lured by the Indian Real Estate story

About $2.5 billion have been invested by overseas realty funds in India to date. And if that wasn't enough, wait to see another $3.5 billion running after the best real estate opportunities India has to offer.

Nearly two dozen US funds are raising $3.5 billion for investments in Indian realty. Those raising the money include Wall Street powerhouses such as Blackstone Group ( $1 billion) Goldman Sachs ($1 billion), Citigroup Property Investors ($125 million), Morgan Stanley ($70 million) and GE Commercial Finance Real Estate ($63 million). Others raising the money are: JP Morgan, Warburg Pincus, Merrill Lynch, Lehman Brothers, Warren Buffett’s Berkshire Hathaway, Colony Capital and Starwood Capital.

Theres been enough said and written on the increasing property prices in India. But that doesn't seem to deter these funds to make investments in the sector. The attraction for these funds is potential investment returns of 25% and more in Indian projects that might be hard to come by in the US and Western Europe today.

One such determined big player is Goldman Sachs. For about a year now, Goldman Sachs’s Whitehall Street Real Estate Funds have been exploring the Indian market and checking out potential investment partners. Some time back the California Public Employees’ Retirement System invested $100 million in a $400-million real estate fund promoted by IL&FS.

Tishman Speyer is among the first US developers to invest in India. Last year, the New York City-based firm formed a joint development company with ICICI Venture Funds of Mumbai that will have a war chest of $2.5 billion. Similarly, New York-based developer Vornado Realty Trust has teamed up with The Chatterjee Group, a venture capital firm also located in New York.

The Indian Real Estate story seems to be growing by the day and everyone wants to play a part in it.

Source: Financial Express

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