The Indian real estate industry may be feeling the heat of policy paralysis and regulatory red-tape but foreign investors like private equity (PE) firm Blackstone are not waiting for a revival to kick in reports CNBC-TV18’s Menaka Doshi and Manasvi Ghelani.
Clearances are delayed, funds are drying up and demand is low – in short, India’s real estate sector is mired in rubble. But even as a string of private equity players pull out of the sector, US-based PE giant Blackstone is sensing a golden opportunity.
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The firm has dedicated over one billion dollars to strengthen its Indian real estate empire, picking up 28 million square feet of office space in the country and is looking for more.
According to Stephen Schwarzman, chairman & ceo, Blackstone Group Indian needs capital, India needs FDI. Its capital markets are not developed enough to satisfy the need for growth in India. “So India needs - whether it is people like us or someone else, they need that money coming in. So there never is a shortage in India. There are good opportunities infact,” he added
Schwarzman is wary of going into details but CNBC-TV18 learns that big plans are afoot.According to sources say Blackstone is in discussions to acquire office portfolios totaling an additional 7 million sq ft in Mumbai, Pune and Bangalore with existing partners Panchshil, and Embassy.
It is expected to seal the deal for the iconic Indian Express towers at Nariman Point in Mumbai for a whopping Rs 900 crore. It is keen to acquire Citi's Mumbai Headquarters at Bandra Kurla Complex for about Rs 185 crore.
It is joining hands with standard chartered bank to put together Rs 1,150 crore to help Embassy Office Park buy a 60 percent stake in the Bangalore IT Special Economic Zone, Vrindavan Tech Village, say sources.
Blackstone has signed a term sheet with HCC real estate and IL&FS milestone fund to acquire an office park in suburban Mumbai for over Rs 1,000 crore and that's just for starters.
“We are very optimistic on our real estate investments in India. They have been very well done, they are in wonderful locations. We have filled building. The tenants are paying rent; many of them are greatest global companies in the world, so we anticipate no problems. We will continue to invest in Indian real estate space,” said Stephen Schwarzman
In these plans, it is clearly betting on high vacancy levels in the office segment to bring in some sweet returns.
According to Sanjay Dutt, executive MD, Cushman & Wakefield (South Asia), “An asset which is leased for the last 3-6 years has some escalations built in coming up for renewal and extensions over the next few years which the investors will benefit from.”
Blackstone is playing the long game which is definitely good news for the cash-strapped Indian real estate space but where it's helping more is in giving hope that more foreign investors will enter the country with a wait & watch attitude.
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