Yatra Capital Limited, the first Euronext quoted company investing in Indian real estate, announces its 10th and 11th investments. It has committed €17.86 million for a mixed-use development in Palladium Constructions Pvt. Ltd., and €10.15 million in Platinum Hospitality Services Pvt. Ltd. for a 30% stake in each of these joint venture companies.
Yatra's joint venture partner in both developments is The Phoenix Mills Ltd. In 2007, Yatra made a strategic investment of €3.73 million in Phoenix for 0.47% equity stake to enable the company to participate in the Indian real estate sector with an experienced and quality player. Yatra has previously invested in two projects with Phoenix: a mixed-use and a hospitality development.
Both developments will come up at Yeshwantpur in Northern Bangalore. The total size of the developments would be approximately 3.5 million ft².
Palladium Constructions Pvt. Ltd. will develop a 1.9 million ft² of mixed-use complex of retail and residential buildings. The development will comprise 1.4 million ft² of retail space and 0.5 million ft² of residential space. The project cost of the development, including the cost of land and construction, is estimated €152.2 million.
Platinum Hospitality Services Pvt. Ltd. will develop a 0.5 million ft² hotel property, including serviced apartments. The hotel will be built at a cost of estimated €64.42 million. Construction on both properties is expected to begin in the last quarter of 2008 with the entire project expected to be completed in five years.
Commenting on the transaction, Sir Nigel Broomfield, chairman of Yatra Capital Limited, said, "We are happy to announce Yatra's presence in Bangalore. With these two investments Yatra would have a presence across asset classes in a key investment destination in India. These investments also underscore the value of our strategic partnership with Phoenix."
Mr. Ajoy Veer Kapoor, Director, Saffron Capital Advisors, added, "Bangalore offers tremendous opportunities for real estate players looking for investments with good risk-reward profiles. Our present investments also fit in well with our strategy of being present in high growth locations and sectors."
Bangalore Spread over 741 km², Bangalore is one of India's major economic hubs. Though for long it has been known as India's Silicon Valley, the city's economic base over the years has diversified with several bio-tech and FMCG companies establishing themselves here. It is a major manufacturing centre for apparels and is located close to one of India's largest auto and auto ancillary clusters at Hosur.
The city has a population of 6.5 million people with a literacy rate of 83%, the second highest after Mumbai. This gives businesses in the city access to a large and continuous talent pool.
A recent survey by Ernst & Young ranked Bangalore as the third most prosperous city in India, after Delhi and Mumbai. It has over 10,000 dollar millionaires and contributed 33% of India's IT exports in 2006-07.
In the coming years, the city's infrastructure is set to undergo a major upgrade as several initiatives by the government such as the new International Airport (expected to be fully operational by April 2008) and the proposed metro rail system take off. This is expected to improve the city's economic competitiveness significantly.
With large integrated townships being implemented by the city administration, Bangalore's real estate sector is set to witness further growth over the next decade. Most of the demand in the city is spurred by internal demand as multinational corporations continue to seek a presence in the city. The recent years have seen Fortune 500 companies such as Microsoft, Dell, IBM and Google as well as financial sector firms such as UBS and several venture capital firms setting up offices in Bangalore.
Yeshwantpur, where Yatra's latest projects in the city are located, is a premium locality surrounded by pockets of middle and high income residenc