Old Mutual Plans 4 New Realty Funds

After life insurance and property services, the $4.5-billion Old Mutual is planning to significantly increase its investments in the Indian real estate sector and plans to come up with four new funds that will invest One billion billion dollar each or more by 2015.
Colin Young, director, Old Mutual Investment Group Property Investments said “We have aggressive strategy and plan to have four funds of one billion dollar or more for India. We want to be among the leading retail developers in India by 2015 and one of the leading realty asset managers”.
Old Mutual also has plans to float a real estate investment trust (REIT) that will raise money locally and invest in yield-bearing office assets. Consequently, other core funds will buy properties developed by the offshore development funds.
OMIGPI, based in South Africa where it has developed a number of shopping centres, and Mumbai-based real estate firm ICS Realty, have floated their maiden five hundred million dollar property fund that will invest two-third of its corpus retail-centric real estate (in developing and managing shopping centres).
Triangle India Real Estate Fund, which was scheduling to raise five hundred million dollar and close by March 31, 2008, has managed to raise the seed capital of one hundred twenty five million dollar from Old Mutual, thanks to a difficult market.
Old Mutual is bullish on retail and is betting on tier-II and tier-III cities. “About eighty percent of the middle-class consumers live in these cities, where the penetration of organised retail is only fifteen percent. Here, people have the money to spend, but they are highly under-serviced by organized retail,” said Kanthawala.
“In these cities, land is existing at practical prices, and we have the chance to build large compelling centres. We buy huge parcels of land, and rope in big retailers to have their buy-in into the project,” added Kanthawala. The presence of big retailers acts as a hedge against competing centers that may come up.
The second fund from Old Mutual is likely to be a Sharia-compliant fund, which will be focused on offices and residential. Old Mutual will also set up a REIT once the government puts in the guidelines in place in the next one year, which will access local money and buy yield-bearing properties which are ready.
Old Mutual and ICS Realty have also set up Pioneer Property Zone, a property development firm to expand and administer shopping centres. This firm will now work completely for Old Mutual’s funds as its advisor in India.

One Comment

  1. Posted May 16, 2008 at 4:29 am | Permalink

    But how is that possible to be compare at that level ?

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  1. […] Though regulatory clarifications are still awaited, fund houses are already on the hunt for key personnel, who have the caliber to look after investments in real estate. Milind Barve, managing director of HDFC Mutual Fund, says his firm has already hired 5 to 6 people in the past 6 months for realty funds. […]

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