Tata real estate arm, Singapore firm in joint venture talks

The real estate arm of the Tata group, Tata Housing Development Company, is exploring the possibility of taking the joint venture route with foreign companies for developing large real estate projects.

The company is in talks with various foreign companies for forming joint ventures. Tata group sources confirmed that United Infrastructure of Singapore is one of the companies with which talks are on.

Real estate development is not a core area for the Tata group and it makes sense to restrict its exposure to the sector by roping in a joint venture partner, sources said.

Said a senior Tata Housing executive: "We are examining the possibility of a forming joint venture but the entire issue is at a very preliminary stage."

The executive refused to divulge further details. The unlisted 60-year old Tata Housing is a subsidiary of group holding company Tata Sons which holds 97.5 per cent stake. The balance 2.5 per cent equity is held by Tata Industries.

United Infrastructure is a subsidiary of United Engineers, a company listed on the Singapore exchange.

The diversified United Engineers has a presence through various subsidiaries in related sectors like engineering and construction, manufacturing & equipment supply and property development.

If the joint venture comes through, it will give a fillip to foreign direct investment (FDI) in the real estate.

This sector has not attracted much FDI due to stringent condition like developing a minimum of 100 acre of land.

Further, the minimum capital required for a wholly-owned subsidiary is $10 million or $5 million for joint ventures.

Another hindrance has been the minimum lock-in period of three years from completion of minimum capitalisation before allowing repatriation of original investment is permitted.

Tata Housing has extensive experience in developing both residential and commercial property in various cities like Mumbai, Delhi, Bangalore Hyderabad and Kochi. It's showpiece property is the Technopolis Knowledge Park at western suburb of Mumbai, Andheri.

Another group company, Tata Industries, has a stake in Information Technology Park, which has developed and manages the International Tech Park in Bangalore.

The other partners in ITP are a consortium of Singapore companies led by Ascendas Land International and Karnataka Industrial Areas Development Board.