India’s real estate sways Abu Dhabi fund

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The famous landmarks in Mumbai, The Gateway of India and Taj hotel.
The famous landmarks in Mumbai, The Gateway of India and Taj Hotel. One of world’s biggest sovereign wealth funds, Abu Dhabi Investment Authority (ADIA), is planning to invest an estimated USD 200 million in India’s real estate sector. Photo: guy_incognito/Flickr

It has been reported that the Abu Dhabi Investment Authority (ADIA) is planning to invest an estimated USD 200 million in India’s real estate sector.

The ADIA, a sovereign wealth fund responsible for managing the vast wealth of oil-rich UAE, has appointed Kotak Realty Fund to make the investments. Analysts estimate that ADIA has assets worth USD 400- 600 billion all over the world, making it one of the most powerful sovereign wealth funds in the world.

The Indian investment highlights the desire of oil-rich Gulf countries to reduce their reliance on investments in mature markets, such as Europe.

Currently, the sovereign fund’s real estate portfolio is largely concentrated towards developed countries but it is seeking more investments in emerging markets.

Encouraged by double digit growth rates in China and India, the highly liquid Gulf-based funds are committed to investing billions of dollars into real estate in these fast-growing economies. Estimates by U.S. investment bank Merrill Lynch show that India’s property sector is set to expand to USD 90 billion by 2015 from USD 15 billion in 2005.

Earlier this month, Oman’s State General Reserve Fund and the Government of Singapore Investment Corp (GIC) and Temasek also revealed their intentions to invest USD 200 million in another Indian real estate fund.

In recent months, India has attracted several billion dollars of capital from the Gulf nations.

These investments have been made in the backdrop of high profile visits by India’s finance minister Chidambaram to the Gulf region. The Indian government has been actively seeking funds from global investors in Asia’s third-largest economy to sustain the economic growth rate. In May, Qatar purchased a 5 percent stake in Indian telecoms firm Bharti Airtel Ltd for about USD 1.3 billion.

The ADIA already has investments of about USD 400-500 million in the country, including a 11.22 percent stake in Infrastructure Leasing & Financial Services and a USD 50 million investment in Red Fort Capital, a real estate private equity fund.

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