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South Asia Real Estate (SARE) fund, a $400-million residential real estate fund targeting mid-market segment, plans to raise another $100 million during January-March next year. The company may rope in a new set of investors, apart from its existing ones.

SARE Fund, part of Duet Private Equity Ltd (DPEL) of Duet Group, an alternative asset management firm based in London, has already invested $180 million across six projects in India, and is targeting to close its next deal in December.

“We are looking at options. We should be doing a transaction by December this year,” Sunil Agarwal, country head, SARE fund told VCCircle.

The company has got 47 investors so far in the fund, which is open to foreign institutional investors only. Its major investors include Forum Partners Investment Management, LLC, Kuwait China Investment Company (KCIC), Topland Group and Goldman Sachs.   

The company, which also executes projects besides making investments, is looking for projects in Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad and Lucknow. It plans to invest in 15-20 projects and execute 10-12 projects in the next 15-18 months. However, it will invest a maximum of $10-15 million per project going forward.

The company is currently engaged in developing projects in Ghaziabad, Gurgaon, Amritsar, Chennai and Indore. All these developments are coming up in area size of between 90 and 150 acres in each of these cities.

Speaking about the demand pick up in the residential space, Agarwal stated that there was not much impact of the slowdown in the mid-market segment, where the fund focuses on.

There is huge competition with new players entering this segment. But, he believes that most developers still want to do luxury housing. So, when the market revives, they will probably go back to the segment because it is more profitable. “Any project launched earlier or now can be sold if the pricing and location are right. I feel competition will help the market become more efficient in execution capability and delivery,” reasons Agarwal.

SARE is targeting the completion of projects in phases, and the first phase of its Ghaziabad project will be delivered during January-March 2011, he said.

Private equity real estate firms operating in India are increasingly focusing on residential realty rather than commercial assets. Recently, Aditya Birla Group launched a $500 million fund focusing on residential realty. Many funds are also focusing on areas like low-cost housing.

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