Provident Housing and Infrastructure Ltd, the wholly owned subsidiary of Bangalore-based real estate company Puravankara Projects Ltd, is in talks with four overseas private equity funds to raise about seven hundred fifty crore rupees to acquire land for its affordable housing projects, a source close to the development said.
“Total project cost is eight thousand crore rupees. Of this, seven hundred fifty crore rupees will be raised through private equity funding at the project level. While one is an Asia-based fund, the remaining three are from the US,” he said.
Provident Housing and Infrastructure announced that it will invest a total of eight thousand crore rupees in seven affordable housing projects spread across Bangalore, Chennai, Hyderabad, Coimbatore and Mysore in the first phase.
The company plans to raise the remaining seven thousand two hundred fifty crore rupees through a mix of internal accruals, debt and customer advances. He also said that the company could dilute between 30-40% stake in each of the affordable housing projects. In the second phase, the company plans to take its low-cost housing projects to Delhi, Kolkata, Kochi, Jaipur, Pune and Nagpur.
Increasingly, real estate developers are foraying into the affordable housing segment in a bid to offset the slowdown in sales of mid-income and high-end apartments.
“In the last 6-12 months, there have been negligible sales in the high-end residential segment. Developers are eyeing the low-income segment as it is also a volumes game,” an analyst at a domestic brokerage said. In May, Delhi-based Omaxe had pronnounced investment of Rs eight thousand crore rupees to build around ten lakh low-cost houses over the next ten years. presently, Puravankara Projects has a land bank of over one hundred twenty five million square feet.
Nearly 65% of the company’s land bank is in Bangalore. It is developing twenty million sq ft of residential and commercial projects.
In a July report, Citigroup Global Markets had downgraded its rating on the Puravankara stock to “hold” from “buy” and cut the price target to Rs 212 per share from Rs 358.