Private equity giant HDFC Property Fund has invested a sum of Rs.500 crore in the leading realty firm, Lodha Developers. This, according to experts, may indicate a revival in the Indian real estate sector where reforms like the Real Estate Regulation and Development Act or RERA and GST are helping in enhancing overall transparency in the sector.
The Mumbai-based real estate developer has obtained a new line of credit for 72 months or 6 years at a very competitive and possibly double-digit rate according to sources. Lodha Developers will reportedly be using these funds for development at its residential project in Thane, which is coming up over a land parcel of 88 acres.
HDFC Property Fund is supported by the Housing Development Financial Corporation and is one of the biggest private equity funds operating in real estate in the country and invests in commercial, residential and mixed-use projects alike. Lodha Developers had purchased the land parcel in Thane from Calriant Chemicals in the year 2014 for a whopping Rs.1,154.25 crore. In 2016, the company successfully sold more than 2, 000 homes at this project before the proposed launch. The value of these booked apartments has surpassed Rs.1,600 crore as per reports. The project will come up through several phases and the current phase has 3, 500 apartments (1/2 BHK units) being developed in 27-30 storeyed towers with a master planned development.
According to experts, transactions like these generate immense confidence about the future growth of the real estate industry in India. Experts also feel that returns will be higher on investments made now in property with demand expected to go up with reforms like GST and RERA being introduced. Large developers have been banking on private equity funds after banks started limiting credit to builders some years earlier amidst a growing number of bad loans. In May, 2017, Lodha Developers also took a loan of Rs.1,800 crore from Piramal Fund Management which is the financial services division of the Piramal Group. HDFC Property Fund had exited the premium World Towers project of the Lodha Group last year. This project is located at Lower Parel in Mumbai and the exit was worth more than Rs.1,500 crore as per estimates. The fund had previously invested Rs.216 crore in a project by Lodha Developers in Hyderabad.
