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NEW DELHI: The real estate fund of Aditya Birla Group has invested Rs 125 crore in a residential housing project being developed jointly by Tata Housing and Sidhartha group on the Dwarka Expressway in Gurgaon, two people familiar with the development said.

The structured transaction is expected to give Aditya Birla Real Estate Fund an internal rate of return (IRR) of 22-24% over the next four years.

CSN Estates, a company owned by Sidhartha group, has pledged the 49% stake it holds in the joint venture with Tata Housing for the Gurgaon Gateway project to Aditya Birla Real Estate Fund, these people said.

The deal is structured in a way that if Sidhartha group is unable to give the fund the promised returns, the group’s stake will get transferred to the fund, one of these people said.

Spokesmen for Aditya Birla Real Estate Fund and Tata Housing refused comment on the deal. Cushman & Wakefield, which was the advisor to the transaction, also declined comment. But Dharampal Dudeja, director ( finance) at Sidhartha group, confirmed the transaction.

Last year, Tata Housing and Sidhartha group had signed a 51:49 joint venture to build a project on 20.8 acres. The land parcel is the first on Dwarka Expressway when one enters from Delhi and is very close to the international airport.

The land was originally owned by the local Gurgaon developer. “The two joint venture partners hope to earn revenues of around Rs 1,200 crore over the lifecycle of the project, which means Aditya Birla Real Estate Fund gets a cover of over Rs 500 crore on its investment of Rs 125 crore,” one of the people quoted earlier said. Tata Housing has already sold about 20% of the project in the first phase.

Aditya Birla Real Estate Fund had recently invested Rs 75 crore in developer V Raheja’s residential project in Mumbai’s Andheri (West) area.

In another transaction on Dwarka Expressway, ASK Property Investment Advisors had invested around Rs 150 crore in a residential project being developed by ATS Infrastructure.

While Aditya Birla Real Estate Fund might have taken a bet on this project because of the Tata Housing brand, the residential real estate market has seen home sales slowing down over the last one year.

The slowdown has been seen across most markets, including Gurgaon. With the economic slowdown and an uncertain job scene, buyers are shying away from the market.

According to property research firm Liases Foras, close to 670 million square feet of residential space is lying unsold across the country, forcing builders to dole out discounts, as was evident during the festive season.

The National Housing Bank’s residential housing index, Residex, shows that 22 of the 26 cities it tracks have already seen a decline in home prices in the quarter to June and prices are expected to fall further.

Some correction in prices is already happening by way of freebies and promotions by developers.

The secondary market, too, has suffered as investors who had invested in projects in Gurgaon and other parts of the country are finding it difficult to get buyers, even after offering deep discounts of up to 25%.


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