Shriram Land Development, in which the managing director of Rs 400 crore Shriram Properties has a stake, is understood to have raised $12 million from Samsara Capital. This will enable Shriram Land to up its land bank in Mysore. Shriram Land is into development of plots and layouts.
Shriram Land since its inception in 2005 has been aggressively building up a portfolio of land assets and with Mysore emerging as the next best destination for software and business process outsourcing companies, this parcel of land is expected to hold the company in good stead. While Samsara Capital said that they would not like to comment on their investments, Shriram Land officials said they are not yet ready to talk on private equity investment and will make an announcement pretty soon.
For Samsara Capital, this appears to be its third investment in Karnataka after investing in projects being developed by IDEB Builders and $41 million in Embassy Group. According to industry information, this is the first time Shriram Land is raising private equity and is expected to step up efforts given the prices of land which is falling.
This investment from Samsara comes at a time when real estate developers are facing severe cash crunch and is understood to be relying heavily on debt at high interest rates. The last two years witnessed a rush of private equity investment into Bangalore-based real estate developers raising hundreds of million dollars for various special purpose vehicles.
“The flow of private equity into Bangalore real estate market is drying up. There is a feeling among private equity players that they are over-exposed to this market and are certainly going cautious,” an industry analyst noted.
According to Jones Lang LaSalle, a real estate advisory firm, it may take another
year before debt markets stabilise and in the meantime, “We are likely to see increased distress sales.” “High growth markets or core markets perceived as oversold may attract the most attention from buyers. With high velocity of price change comes opportunity for buyers. The range of opportunity will increase for those able to commit equity,” the report noted.
