ADIA in talks with Runwal for a joint development venture

It has reportedly set up similar platform with US based property investment and management firm Hines to invest in properties across North India

United Arab Emirates-based sovereign wealth fund Abu Dhabi Investment Authority (ADIA) is in talks with Indian developer Runwal Group to jointly buy land and develop properties in India, said two persons in the know.

If the talks fructify, this will be ADIA’s second joint venture in India. It has forged a similar arrangement with Hines India Real Estate, the Indian arm of US-based property investment and management firm Hines, to invest in properties across north India.

Besides, the sovereign wealth fund has appointed Kotak Realty Fund to invest $200 million in Indian real estate.

“They (ADIA) are looking to have a couple of good developer partners in the country. They are talking to developers such as Runwal in this regard,” said one of the two persons cited above.

When contacted, an ADIA spokesperson refused to comment on its investment strategy. Sandeep Runwal, director of Mumbai-based Runwal, too, did not offer any comments.

If ADIA ties up with Runwal, it will be joining the likes of Mahindra Lifespace Developers (which has a joint venture with the UK’s Standard Chartered) and Godrej Properties (joint venture with Dutch pension fund APG to float a Rs 770-crore property fund).

Besides, Canada-based Brookfield has floated a fund management venture with Mumbai-based Peninsula Land, which has raised a corpus of Rs 1,000 crore. Qatar Investment Authority has also floated a joint investment platform with Bangalore-based RMZ to invest in properties.

“Earlier, the big investors did not make expected returns when they invested in funds. With the improvement in the economy, they are looking to invest with developers directly,” said Amit Goenka, managing director, at Nisus Finance Services.

Added Shishir Baijal, chairman of Knight Frank India: “Now, funds are aware of the dynamics of Indian real estate and seem to have learnt their lessons.”

However, some developers say they are not comfortable with a tie-up with global funds.

“A fund needs to ensure its capital is in safe hands as there have been structurally flawed deals in the past, where non-performance has gone unchecked and has benefited one party at the cost of the other,” said Anita Arjundas, managing director, Mahindra Lifespace Developers.

Another developer, who did not want to be named, said: “A developer has to move very fast in acquiring new land parcels, but funds take their own time in clearing the fund buys. Developers might lose land parcels.”

Godrej Properties’ fund management head, Karan Bolaria says Godrej has developed a working relationship with its investors, ensuring the decision-making is straightforward and efficient.

JOINING HANDS

• Dutch Pension Fund manager APG joined hands with Godrej Properties for a Rs 770-cr realty fund
   
• Standard Chartered Bank tied up with Mahindra Lifespaces to jointly invest in properties
   
• Canada’s Brookfield joined hands with Peninsula Land for a property fund
  

 

Qatar Investment forged a partnership with Bengaluru-based RMZ