Emaar to invest $150m in three Indian projects

Dubai: Emaar is set to inject $150 million for a 20 to 25 per cent stake each in three real estate developments in India, to boost funds in its Indian joint venture.

Emaar and MGF Developments of India set up a joint venture in 2005 called Emaar MGF, which currently holds India's largest foreign direct investment (FDI) in real estate through projects with a combined development value of $1 billion.

Emaar is now considering to pick three separate special purpose vehicles (SPVs) which will then develop two retail properties and one office property in Gurgaon and Mohali.

An Emaar spokesperson said: "Emaar is evaluating the options of private equity investment in special purpose vehicles in India. Due diligence on potential investments are on and details have not yet been finalised."

Emaar holds 41 per cent in the Emaar-MGF joint venture while MGF holds 56 per cent. The remaining three per cent is split between private equity firms and other investors, according to a report by India's Economic Times.

The Economic Times report also said that due to apparently adverse market conditions, Emaar MGF was forced to withdraw its Rs7,000 crore IPO in February.

Stock exchange data back in February showed the Emaar MGF IPO was subscribed 0.39 times, making the decision to withdraw helpful "in the long run", said Shravan Gupta, executive vice-chairman and managing director of Emaar MGF, at the time of the IPO withdrawal.

McKinsey Global Institute predicts that this growth is down to the growth in purchasing power and higher disposable income of the emerging middle class, which is expected to increase ten-fold to 583 million, by 2025.

Emaar says estimates show India currently faces a shortage of around 26 million residential units in the next five years. At the same time, the property market is expected to grow seven times its current size by 2015.

"Inflationary trends are a global trend and governments across Asia are taking concerted efforts to control it.

"India's strong economic fundamentals will continue to drive economic growth and, in turn, demand for residential and commercial properties," the spokesperson said.