Starwood Capital plans to invest $500 million in India

November 15, 2006	(Be the first to rate this story!)  Loading ...
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US property investor Starwood Capital Group LLC plans to invest up to $500 million in equity in India in the next three years but it will tread cautiously as it sees risks in the booming real estate market, its chairman said.

“We are very excited about investing in India, but it’s going to be the tortoise rather than the hare. It is going to be slow,” Chairman and CEO Barry S. Sternlicht told Reuters in an interview on Tuesday.

He said Starwood, which has funds of was “pretty close” to a deal to invest close to $50 million in a residential project in a secondary city. Starwood plans to invest jointly with different local partners in different regions and business segments such as hotels, offices and residential properties.

“Probably we won’t do anything here without a local partner. Typically we would do that either at the individual project level or the company level.” Sternlicht, in Mumbai for a real estate conference, said Starwood could help Indian companies, which are keen to expand overseas, particularly in the hospitality sector.

“I think there is another opportunity for us, which we haven’t talked much about which is to help Indian companies that want to go overseas and expand.” He said Starwood would start operations in smaller cities. “We will move into the primary cities too but we will take our time, we’ll try to take a long view on land.”

Trees to the moon: India’s booming property market got a shot in the arm last year when the government allowed foreign funds to invest in real estate, attracting firms like Morgan Stanley and Tishman Speyer. Foreign and domestic private funds have said they have more than $5 billion to spend in Indian property. Sternlicht said the market had several risks.

“I would say it’s a bit of a bubble mentality that it is only going to go one way, it’s a dangerous mentality. There is a danger of complacency assuming that trees can grow to the moon.”

“There is a risk for investors in property, in public companies that are property-related and to the lenders too at some point.” Sternlicht said construction prices would go up as labour costs rose.

“Spreads will narrow and the cycle will move on like in every other country in the world. It’s a question of when, not if.”

He said even lenders may be hit at some stage although it was not a big issue yet. reuters

Source: www.dailytimes.com.pk

News Published Under:   Real Estate Developers |

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