INDIA - India's booming real estate market is becoming a hot investment spot for cash-rich international pension funds and hedge funds, according to fund managers.
Leading pension funds from the US such as the US$208bn California Public Employees Retirement System (CalPERS) and the Pension Fund of Oregon State, Tiger Management, Oxif and insurance giant AIG are among those investing huge sums in various real estate funds floated by corporates and fund managers – with the cumulative figure shooting over $4bn.
IL&FS Investment Managers (IIM) raised $405m in early May, and is now raising another $200-300m. A fund manager, who wished to remain anonymous, said CalPERS and Oregon PF have invested $100m each in the IL&FS fund.
It’s also rumoured that US-based hedge fund Trikona is considering a $200m investment in India’s real estate sector. “India’s hot property sector has global investors queuing up to invest,” said Assif Shameen, a pension fund consultant based in Mumbai. “This will continue for some time.”
The IIM fund is investing in housing developments, units in special economic zones (SEZs), townships and retail malls. “We have already started investing in companies. Each investment will be in the range of $20-50m,” said Shahzaad Dalal, vice chairman and managing director of IIM.
The size of the Indian real estate market is estimated to be $15bn, and it is currently growing at a pace of about 30% annually. Much of the growth is due to the boom in IT and IT-enabled services, which need fully developed properties.
This sector is also projected to require more than 66 million square feet of space over the next five years.
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