Friday, June 20, 2014
Why Indians are Buying London Properties
Mumbai-based Indiabulls Real Estate on Thursday bought a Rs. 1,550-crore property in London's upmarket Mayfair area. Indiabulls' investment in London is the third largest transaction by a domestic realtor in the last six months.
In February 2014, Indiabulls' rival Lodha Developers had bought a prime London property at £90 million. In November 2013, Lodha had bought Canada's embassy building in London for Rs. 3,300 crore. (Read the full story here)
Indiabulls, which will finance the purchase from internal accruals, wants to convert its London acquisition into a luxury residential property. The London transaction is nearly 40 per cent of Indiabulls Real Estate's market capitalization.
The company is part of Indiabulls Group and is developing over 24 million sq. foot of projects currently.
Gagan Banga, CEO of Indiabulls said the company plans to steadily build a portfolio of projects in London.
The latest transaction indicates the growing interest of Indian developers in global properties amid a sharp slowdown in the domestic property market.
India's stock markets have rallied to record highs on hopes that the new government will bring the economy back on tracks, but the optimism has not percolated to real estate transactions.
Interest rates continue to be high and property prices have not corrected despite increasing inventory of unsold flats, analysts say.
Shares in the company closed 0.65 per cent higher at Rs. 92.75 and outperformed the BSE Realty sub-index, which rose 0.5 per cent.
Mumbai-based real estate developer Lodha Group said on Friday it has bought Canada's embassy building in London's prime Mayfair district for around $530 million (or around Rs. 3,300 crore at 62 rupee per US dollar).
The seven-storey Canadian High Commission in Grosvenor Square, known as Macdonald House, will be converted into luxury residences for the super-rich, Indian media said.
"We will create a world-class development, which befits the status of the address," said Abhishek Lodha, managing director of Lodha Group.
The Lodha group was chosen as the buyer of the property by the Canadian government after a competitive bidding involving global developers and sovereign wealth funds, the Lodha Group said.
The Indian firm is buying the property through internal funds and does not plan to raise debt to finance the deal, officials said.
In 2010, India's Sahara group had acquired the Grosvenor House hotel in London for around $750 million (or nearly Rs. 4,650 crore) from the Royal Bank of Scotland.
In December last year, the Lodha Group bought the US Consulate's Washington House property in Mumbai for $54 million (nearly Rs. 34 crore).
The Lodha Group is building what it claims is the world's tallest purely residential tower in Mumbai, called "World One", set to be completed in 2014.