Prestige Estates inks Rs 2,000 crore residential projects deal with ADIA, Kotak AIF

Bengaluru-based Prestige Estates Projects on Monday announced an agreement valued at Rs 2,000 crore with the Abu Dhabi Investment Authority (ADIA) and Kotak Alternate Investment Fund. The collaborative venture aims to foster the development of residential projects across strategic locations in India.

The funds secured through this partnership will be channelled into projects situated in key cities such as Bengaluru, Mumbai, Goa, and the National Capital Region (NCR). These projects collectively boast a gross development value exceeding Rs 18,000 crore as disclosed by Prestige.

Venkat K Narayana, CEO of Prestige Group, elaborated that the agreement primarily entails quasi-equity, predominantly comprising optionally convertible debentures and non-convertible debentures.

Prestige currently oversees the progress of 41 ongoing and 26 upcoming residential projects, reflecting its robust presence and commitment to the real estate landscape in India.

The real estate sector has increasingly garnered attention from foreign investors, buoyed by the nation's burgeoning economy, favourable policy reforms, and robust infrastructure development. In 2023 alone, institutional investments in the real estate sector surged to over $5.8 billion across 53 deals, as per data from JLL, a leading real estate management firm.

While the office space segment continues to attract major investments, the residential sector is also poised for substantial growth. Factors such as rising disposable income and the growing preference for spacious homes have propelled investor interest in residential projects, according to a report by real estate firm Colliers.

Shobhit Agarwal, CEO of the capital markets division at ANAROCK Group, noted that such deals, like the one struck by Prestige, are likely to pave the way for additional private investments beyond traditional avenues like qualified institutional placements (QIPs).

In recent times, several real estate developers have successfully raised substantial funds through strategic collaborations. Last year, Embassy Group secured Rs 1,250 crore from Bain Capital, while Valor Estate (formerly D B Realty) raised Rs 920 crore from investors including Morgan Stanley and BNP Paribas in March.

Prestige Estates Projects operates across 12 major locations in India, with a diversified portfolio comprising approximately half residential and 42 per cent commercial projects. The positive market sentiment following this announcement reflected in the company's shares, which surged by 8.3 per cent on Monday.

(With Reuters inputs)