Blackstone lines up Rs 1,000 crore for residential realty

The company is in advanced talks with many developers

Blackstone, one of the largest investors in commercial properties, is set to step up presence in the residential segment, said a top executive in the know. According to him, who spoke on the condition of anonymity, the US private equity (PE) giant is gearing up to invest about Rs 1,000 crore in residential projects across Indian metros. The company is currently in advanced discussions with many developers, the executive revealed.

Recently, the New York- based fund invested Rs 175 crore in the Chennai project of Bangalore-based Ozone Group, its first investment in the residential sector.

Blackstone, which has invested about $1 billion in commercial properties in India, has so far stayed away from directly investing in residential properties. However, it had exposure to residential real estate by the virtue of taking over the $2.68-billion Asian Real Estate Opportunities Fund of Bank of America-Merrill Lynch (BofA-ML) in 2010. The most high-profile one in BofA Merrill Lynch's India portfolio being its $377-million (Rs 1,800 crore) investment in DLF's housing projects. It picked up 49 per cent stake in seven mid-income housing projects of DLF, the country's largest property company, in Chennai, Bangalore, Kochi and Indore.

Its US peers such as Morgan Stanley, The Carlyle Group and others have entity-level stakes in some of the large realty companies. For instance, Morgan Stanley has entity-level stake in Mumbai-based Oberoi Realty. Carlyle has stake in the Jerry Rao-promoted Value & Budget Housing Corporation.

The timing of Blackstone's investment in residential properties bodes well for the investor, since residential enquiries have picked up in many markets such as the National Capital Region and the Mumbai Metropolitan Region after the new government came to power and buyer sentiments have revived, consultants said.

"This is just an opportunistic investment. We did not get good opportunities in the past. Internationally, we invest in all asset classes abroad," said another executive associated with the PE firm.

An email questionnaire to Blackstone did not elicit any response.

Blackstone is a careful player, says Ambar Maheshwari, managing director, corporate finance at Jones Lang LaSalle (JLL). "They (Blackstone) did not invest when the prices were very high, Then, slowdown happened and prices crashed. If they are looking at residential, I think they are very serious about it." He added Blackstone would look at India-dedicated funds given their portfolio of assets.