MUMBAI: In yet another push to the growing Indian real estate market, a former Morgan Stanley head has launched an alternative fund that will focus on real estate opportunities in south India alone.

Details about the size of the fund, named Ptarmigan Capital Investment Fund, weren’t immediately known.US-based Ptarmigan Capital, promoted by Craig Phillips, who was once incharge of Morgan Stanley’s real estate division, has roped in former HDFC executive director R V S Rao to head its Indian office.

The fund has reportedly opened offices in Stamford and Connecticut, apart from Bangalore. The fund is keen to tap the growing segment in south India “with its affluent, educated and growing middle class (which) is experiencing significant economic growth and an unprecedented level of demand in the resident and commercial real estate sectors,” Ptarmigan Capital said. Interestingly, former Morgan Stanley executives, Guru Ramakrishnan, Vikram Pandit and John Havens in 2005 had floated Old Lane, a fund for real estate and infrastructure, which also recently closed a $500 million corpus for India.

Experts say that robust growth in the southern markets, especially in software, pharma and automobiles, has led the real estate prices in cities such as Bangalore, Chennai and Hyderabad to surge sharply over the past two years.

Post two big-ticket property deals, the Chennai property market has emerged as a favourite investment destination for private equity funds with large developers. Last week, AIG Real Estate Fund along with the Bangalore-based RMZ Corporation bought an 11-acre plot at Guindy belonging to Hindustan Teleprinters, a subsidiary of HFCL, for Rs 298.10 crore.

In another deal, Shyam Kothari, brother-in-law of Mukesh Ambani, bought IDBI’s 2.5-acre Boat Club property in Chennai for Rs 175 crore. The two deals are learnt to have taken the commercial property prices in Chennai to a new high. International property consultants Jones Lang Lasalle was the advisor to both the deals.

The HTL-AIG deal has pushed land price in Chennai to a record Rs 27.1 crore per acre from the earlier Rs 15-18 crore per acre. The price of premium properties in Chennai has increased significantly over the past 12 months, driven by high demand and limited supply. Since India eased rules on investment in construction industry in 2005, the country has seen a sharp rise in funds inflow. Foreign funds of Warburg Pincus, Citi, Morgan Stanley, JPMorgan and Merrill Lynch have mobilised over $3,000 million to invest in the Indian real estate market.

Source: Economic Times SATURDAY, MARCH 17, 2007

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