Adia and India’s Kotak to invest $240m in Prestige Group housing projects

New projects to come up in four cities in India as property market in Asia's third-largest economy remains buoyant

Residential and commercial buildings in Mumbai. Bloomberg

India’s real estate company Prestige Group has signed a 2,001 crore rupees (about $240 million) deal with Abu Dhabi Investment Authority, one of the world’s biggest sovereign wealth funds, and Kotak AIF to develop residential projects in the South Asian country.

The four new projects in Mumbai, Bengaluru, Goa and the National Capital Region (NCR) in Delhi have a gross developmental value of more than 18,000 crore rupees, Prestige Group said in a statement on Monday to the Bombay Stock Exchange, where its shares are traded.

The company did not divulge the timeline of the projects but said the deal is aimed at “catalysing the development of early-stage residential projects”, to help it expand and push for growth.

Adia, which invests on behalf of the Abu Dhabi government, declined to comment on the latest transaction.

Adia is the largest sovereign wealth fund in the Gulf and the fourth-largest in the world, with estimated assets of $993 billion (equivalent to 320 per cent of Abu Dhabi's gross domestic product), credit rating agency DBRS Morningstar said last year, citing data from Global SWF.

The fund, along with Saudi Arabia's Public Investment Fund, Mubadala Investment Company, ADQ and Qatar Investment Authority – referred to as the “oil five”, were ranked among the top 10 most active deal makers last year, the industry specialist Global SWF said in its annual report in January.

Adia makes direct and indirect investments across asset classes such as equities, fixed income, infrastructure, private equity and property.

As of December 31, Adia’s 20-year and 30-year annualised rates of return, on a point-to-point basis, were 7.1 per cent and 7 per cent respectively, compared with 7.3 per cent and 7.3 per cent in 2021, it said in its annual report.

The fund expects continued investment opportunities, despite rising inflation and higher borrowing costs globally, according to the report.

Adia's other investments in India include $500 million in Lenskart, an online retailer for eyewear, as well as investments in Reliance Industries’ Digital Fibre Infrastructure Trust and Reliance Retail Ventures.

"We are pleased to partner with Adia and Kotak AIF, globally renowned and sovereign investors with an established track record of promoting sustainable growth across diverse industries,” Irfan Razack, chairman and managing director of Prestige Group, said.

Housing demand in India, Asia’s third-largest economy, remains strong, with prices across the top eight cities surging by about 20 per cent in the last two years, according to a recent report by Credai, Colliers and Liases Foras.

Bengaluru, Delhi NCR and Kolkata have recorded the highest rise in average housing prices at about 30 per cent in 2023 compared to 2021 levels, underpinned by a "notable uptick in housing demand, particularly in the mid and luxury segments", the report said.

Other cities including Ahmedabad, Chennai, Mumbai Metropolitan Region, Pune and Hyderabad have also recorded strong growth in prices amid continued demand from buyers.

"Looking ahead to 2024, the market is well poised to maintain its current trajectory, with the mid and luxury segments expected to thrive further, offering lucrative opportunities for investors and homebuyers alike,” Badal Yagnik, the chief executive of Colliers (India), said.