Atlanta-based Portman Holdings is hoping its bullish outlook on residential real estate in India is contagious as it solicits up to $300 million in private equity in the coming years to tap opportunities in the housing sector there.
Aside from rapid GDP growth, the world’s second most populous country is also one of its youngest, with more than half its population under 25. Many are moving to cities, where factories and offices are going up to support the manufacturing and service sectors.
For all those reasons, Portman is confident that demand for housing will continue to grow in the country’s key cities, Rahul Anand, Portman’s managing director in India, told Global Atlanta.
In late November, the firm made the first private-equity investment in The Promont, an upscale housing development by Tata Housing on the outskirts of Bangalore, India’s high-tech hub. According to a Tata statement, the value of Portman’s 26 percent stake is about 65 crore Indian rupees (about $11.8 million).
While Portman has made a name for itself with mixed-use retail and office projects throughout the world, especially in China, housing is the focus for now in India, Mr. Anand said.
“Right now, residential is just too good to ignore to do anything else,” he said, noting that Portman is open to other opportunities in the future.
Affordable housing, while needed most, is the hardest for foreign firms to tap into, requiring either a partnership with a public entity or some kind of innovative technology to keep costs down, he said.
Instead, Portman is staying in the mid to upper levels of the market, somewhere between “affordable” and “super luxury.” The firm is with working established partners on permitted projects to avoid the nightmarish regulatory system for land titling and building permits.
“We build all that into our underwriting to start off with. We invest with partners who are experienced in those kinds of projects. We invest in projects which have already gotten permissions so that we don’t waste our time waiting for permissions, so there are ways around it,” Mr. Anand said.
The Tata project in Bangalore has already begun construction, with buyers starting to come in even as it’s being built.
“The beauty of residential in India is that you can sell the units as you are developing them. That is one of the key criteria why we’re in the residential sector, because then it doesn’t become very capital intensive because obviously the buyers are funding the development, so your equity can be less and you get more bang for the buck.”
Investors will gain exposure to current and future projects where Portman is also investing some of its own cash. The firm opened its Mumbai office in 1998, providing a platform for oversight on development projects until India opened its real estate market to foreign ownership in 2005 (under certain stipulations). Since 2009, Portman Holdings has invested in more than 3 million square feet of property.
In addition to the Tata project, Portman has partnered with Kolte-Patil Developers Ltd. on two residential projects in Pune, India. Margosa Heights has 22 apartment towers and 970 units, while Tuscan Estate includes 11 mid-rise buildings with more than 500 units.
Visit www.portmanholdings.com for more information.