May 04, 2006 | Business World

Into real estate with THDC

The Tata group's decision to enhance its presence in the booming real estate sector has given THDC, the property development arm of the Tata group formerly known as Tata Housing & Development Corporation, a fresh lease of life. The Tata Sons subsidiary is drawing up plans to build u seven townships with an area of between 60 acres and 110 acres each, in the outskirts of Mumbai, Delhi, Chennai, Kolkata and Bangalore, besides other mini metros.

The project cost of these townships is estimated to be between Rs 1,300 crore and 1,500 crore or a cumulative investment of around Rs 10,000 crore. These self-contained townships - ground breaking activities for some of these will begin this year itself - will host commercial development, retail and entertainment, infrastructure like medical facilities and schools though the bulk of the development will be focused on residential accommodation.

Given its head start in the business, THDC seems poised to take advantage of the high growth realty sector. The company was set up in 1984 and has put up several residential projects in Mumbai, Pune, Goa and Bangalore including the high-profile Petit Towers in Mumbai's upscale Kemp's Corner. THDC has also dabbled in developing commercial properties, but considering the unorganised nature of real estate dealings in India, sources said that it has shied away from going full throttle.

However, with the increase in foreign investor interest and the slow but imminent cleaning up of the real estate sector, this is likely to change. First, the Tata brand name gives it an advantage especially as a large part of THDC's real estate development will be targeted at residential users. Second, some of the Tata group companies already own large tracts of land that are suitable for commercial development.

However, given the small size of THDC, the company may need capital infusion as well as an increase in its talent pool. While projects will be funded through debt and equity, plenty of options are available for raising funds including foreign real estate funds that are flocking to India where returns are estimated to be high. That R.K. Krishna Kumar, Tata Sons director, is understood to be the man behind the initiative, also underscores its importance to the group.

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