Pinnacle

A US-based infrastructure company on Thursday unveiled plans to invest $1 billion in Indian real estate in what is being billed as the largest foreign direct investment (FDI) in the newly liberalised sector.

Royal Indian Raj International Corporation (RIRIC), a Nevada-based company promoted by people of Indian origin, is firming up plans to build integrated townships and planned cities in the country.

The company has entered into a strategic partnership with New York-based real estate investment banking firm The Greenwich Group International to finance the development of multiple private cities in India.

“We have already been working on our inaugural residential project on a 17-acre plot on the outskirts of Bangalore,” said RIRIC CEO Manoj C Benjamin.

“With the Indian real estate sector in transition and recent landmark legislation allowing FDI into it, the opportunity for participation in this formerly closed market is heightening,” Benjamin said.

RIRIC said it aimed to take advantage of India’s immense housing shortage by developing large-scale commercial and residential townships in four megapolises - Bangalore, Mumbai, Kolkata and New Delhi.

The company claimed its plans for the next 10 years in India would provide direct employment to nearly 10,000 people and indirect employment to another 40,000.

“We have got into a contract to acquire nearly 5,000 acres of land near Mumbai, 3,000 acres near Delhi, 5,600 acres near Bangalore and another 5,000 acres near Kolkata,” Benjamin claimed.

He, however, said the final settlement of these deals depended on several factors - chiefly approvals from state governments.

Benjamin said Mumbai alone would need anywhere between 180,000 and 200,000 additional residential units in the next 10 years. India is expected to see an annual shortfall of 20 million housing units till 2011.

The $50 billion Indian real estate market is booming and expected to grow at 25 per cent annually. The boom owing to the consumption powered growth of the country’s economy has seen investors planning nearly 250 new shopping malls by 2008, as against just three that existed till 2002.

The central government adopted a regulation in February allowing foreigners to bid for Indian construction projects with local partners and also reducing their minimum land-holding limit from 100 acres to 25 acres.

Enthused by the liberalised investment guidelines, a slew of foreign builders are rushing to launch projects in Asia’s third largest economy.