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Owing to infrastructure development, New Gurgaon sees rise in PE investors

The Economic Times:  December, 2014

New Delhi: While home sales might be on the slow lane in Gurgaon, private equity funds and non-banking financial companies have found a niche within the city to invest in. Over the past 15 months, New Gurgaon, which is an area between Manesar and old Gurgaon, has seen investments in real estate projects by several private equity funds.

Singapore sovereign wealth fund GIC recently put in Rs 150 crore in a joint venture with realty firm Vatika group to develop two projects in this area of Gurgaon. Earlier, Piramal-owned Indiareit had invested about Rs 100 crore Ashiana Homes and Landcraft. India Infoline had invested around Rs 100 crore in a project by Assotech Ltd. Kotak Realty Fund, which was one of the early investors in the area, exited its investment in builder Orris when the Religare Credit Opportunities Fund invested Rs 70 crore with the builder.

"Prices in this area are still reasonable. Wherever prices are belowRs 6,000 per sq ft, sales are still happening," says Rahul Rai, head real estate business at ICICI Prudential AMC. The fund has invested in two projects of builder ATS in New Gurgaon in the past 15 months.

What has helped investors take a positive call on the area is its infrastructure development that has been done by some developers such as Vatika, DLF, Sare and others which have large township projects in the area.

"The physical infrastructure in this area is already ready and social infrastructure is getting developed," says Anckur Srivasttava, chairman of GenReal Property Advisers.

Srivasttava points out that this stretch, especially projects which are part of the older master plan 2021 of Gurgaon, have ready access today. "People have moved into some completed projects in the area which is a positive when a fund looks at investing in an area."

Bhupindra Singh, associate director, investments at property advisory firm DTZ, says private equity interest in the area is there today because pricing here is still in the mid-income range compared to other new and old parts of Gurgaon where prices are unaffordable.

While home sales across Gurgaon have been very low in the past one year, property brokers and investors say sales are slightly better in New Gurgaon because of this price advantage.

Khushru Jijina, managing director of Piramal Fund Management, which manages the Indiareit fund, says they invested in the area because issues of infrastructure and project approvals are not there.