The Triangle Real Estate India Fund, established by Old Mutual Investment Group Property Investments (OMIGPI) and ICS Realty of India with the aim of achieving superior returns in the world’s fastest growing economy after China, has secured an investment pipeline of projects worth more than $400 million.
The $500 million fund, which is due to open on March 31, is initially aiming to capitalise on the rapidly expanding organised retail market in India, says Colin Young (Pictured right), head of institutional property investments at OMIGPI.
“Organised retail is wholly under-represented in India,” he says. “Retail is dominated by small operators, mainly owner-operated kiosks. Currently organised retail accounts for less than 4% of the $400 billion market.
"The organised sector is expected to grow to 12% by 2010 as consumer preferences in a growing, urbanising population, half of which is under 25, increasingly shift to modern retail formats.
"Local retailers have ambitious expansion plans to take advantage of rising income levels, a growing middle class, and a move towards international lifestyle brands.”
Young says that while the Triangle Real Estate India Fund will be weighted to retail, it will also take account of the growth in the commercial sector that is being driven by information technology and IT enabled services
Deepak Premnarayen, co-founder and chairman of ICS, says the fund is well positioned to take advantage of the boom in Indian real estate that has been driven by positive economic developments and demographic changes.
“It is expected that the market capitalisation of the real estate sector will more than treble to reach $50 billion by 2010.”
The India Fund is one of three Triangle funds targeting institutional investors and was established five years after OMIGPI first entered the Indian property market with a property services joint venture, Pioneer Property Zone, in partnership with ICS Realty.
“Pioneer Property Zone now offers a range of property services through its offices in Mumbai, Delhi and Bangalore and continues to draw on the retail development experiences and operational practices in Old Mutual’s unlisted and listed real estate portfolio,” says Premnarayen.
“The established network built by Pioneer Property Zone and ICS is a key source for projects, including those in the initial pipeline.”
Anil Dhanjee, fund manager of the Triangle India Fund, says a significant part of the initial $400 million pipeline value is for a more than 27% equity investment in four projects, one of which is already under construction.
“These are part of a focused strategy by a retail and property partnership for large mixed use developments. They are planned to cover 16 million square feet (or 1,5 million m²) and present an opportunity to create super regional retail shopping centres.
The project under construction, covering 1,2 million sq ft (about 111 000m²) is in Aurangabad, a top 10 tourist destination and education hub of Maharashtra state. More than 75% of the retail area has already been leased to leading brands, says Dhanjee.
The other three projects forming part of the $105 million equity investment are all mixed use developments, including retail, hospitality and commercial components. They are:
a project of 4,9 million sq ft (455 000m²) in Indore, the commercial capital of Madhya Pradesh state
a project covering 4,3 million sq ft ( 400 000m²) in Nagpur, the preferred information technology destination, after Mumbai and Pune, in Maharashtra
a phased development of 5,2 million sq ft (483 000m²) in Jaipur, a major tourist destination and a city which has been positioned for development of the IT industry by the Rajasthan government.
Another project under construction is a 860 000sq ft (80 000m²) retail and hospitality development in Bhopal, one of the largest manufacturing and engineering hubs in India and a secondary educational hub in Madhya Pradesh state. The fund will have a majority equity share.