KKR Invests in Mumbai Builder's Plush Condos for City's Rich

  • Tenants include top executives, Bollywood celebrities
  • Investment highlights PE interest in Indian real estate

KKR & Co., the private equity firm founded by Henry Kravis and George Roberts, will invest in two Mumbai projects by a developer of luxury condominiums in a property market that’s grappling with the lowest home sales in at least five years.

KKR will invest 1.5 billion rupees ($22 million) in Sunteck Realty Ltd.’s residential projects in the Bandra Kurla Complex, one of Mumbai’s popular business districts, the two companies said in a joint statement without giving further details on the transaction. Set to open in 2016, Signia Isles and Signia Pearl have garnered high-profile tenants including top industrialists, executives and Bollywood celebrities, they said.

“We needed to explore a new partner for our plans to grow exponentially and this is the beginning of a long relationship,” Sunteck’s Chairman and Managing Director Kamal Khetan said in an interview to Bloomberg TV India. “We are looking at more money coming in from KKR for future projects.”

KKR’s investment marks the increasing interest by private equity firms in India’s real estate market as developers, grappling with a funding squeeze, turn to such investors. Private equity real estate funds pumped in about $5 billion in Indian property last year, the highest since the financial crisis of 2008, according to data from Venture Intelligence.

Mumbai Market

Home sales in Mumbai declined 17 percent to 10.1 million square feet in the September quarter from the previous three months, data from Liases Foras show. The inventory of unsold homes rose across all major Indian cities, according to data from Liases Foras Real Estate Rating & Research Pvt. The number of months it would take to sell all the stock rose 7 percent to 47 months, the data showed. A healthy market normally should have about 12 months of inventory, the research firm said.

“We now feel there are lot of distressed assets in the market so we can grow the company to a different level, but we will require capital,” Khetan had said in an interview last year.

Shares of the developer rose 1 percent to 230.15 rupees on Thursday in Mumbai, after jumping as much as 4.4 percent earlier, compared with a 0.5 percent gain in the benchmark S&P BSE Sensex.

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