This special purpose vehicle (SPV) -- Arvind Homes Pvt, set up at an initial investment of Rs 250 crore, will focus on developing high quality affordable and mid-income housing projects for upwardly mobile professionals and businessmen in Ahmedabad, Bengaluru and Hyderabad
Ahmedabad-based Arvind Smartspaces, part of the Lalbhai group, which is famous for its textiles, has entered into a strategic partnership with HDFC Capital Affordable Real Estate Fund 1.
This special purpose vehicle (SPV) -- Arvind Homes Pvt, set up at an initial investment of Rs 250 crore, will focus on developing high quality affordable and mid-income housing projects for upwardly mobile professionals and businessmen in Ahmedabad, Bengaluru and Hyderabad.
“The two entities -- HDFC and Arvind -- will invest in the ratio of 80:20. HDFC has contributed its share in the form of optionally convertible debentures (OCD). The entire amount would be spent on acquiring new projects,” Kamal Singal, Managing Director and CEO of Arvind SmartSpaces told Moneycontrol.
The investment when fully utilised will have up to four projects of around one million sq ft each in its kitty. The company is looking at launching close to four million sq ft by middle of next year.
The company would first launch projects in three cities: Ahmedabad, Bengaluru and Hyderabad. “We already have a strong presence in Ahmedabad, Gandhinagar and Bengaluru. That is where we want to consolidate further. The idea is to undertake high quality, mid-income houses in these cities. In Bengaluru, we are planning to launch units between Rs 60 lakh to below Rs 1 crore,” he said.
The company would be identifying new land parcels soon.
Singal hopes to close land deals in the next three to five months and expect to start launching projects by middle of FY21. He added that the first project would be located in Bengaluru, followed by Ahmedabad and Gandhinagar.
Once approvals are received, the company would take three-and-a-half to four years to deliver the projects.
The focus of the company would be to first launch projects in Bengaluru in the affordable (price range Rs 35 lakh to Rs 60 lakh) and mid-income (from Rs 60 lakh to Rs 90 lakh) categories, respectively.
As for the north India market, the company does not have Delhi NCR on its radar yet. “We keep our eyes open on every market, but north India is not on our radar right now. As an ongoing process, the company keeps evaluating markets like Mumbai,” he said.
The company is also open to taking on ‘clear’ land parcels from developers whose projects may be ‘stuck’ or ‘delayed’. “We are open to projects where the builder may not have been able to start work but where the location is good and land viable. We are not open to parcels where there are complications in terms of part selling or where there are outstanding issues with existing customers,” he explained.
While the capital invested by the two entities (HDFC and Arvind) is in the ratio of 80:20, Arvind Smartspaces is hopeful that it would receive attractive returns on its investment. “Being a developer partner, we will get an attractive sweat remuneration in this. We will obviously be earning a proportionately higher amount as we perform on the waterfall that we have agreed. This is expected to enhance our return on equity and our effective RoE would improve dramatically,” he firstname.lastname@example.org
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