Provident Housing and Infrastructure Ltd, a wholly owned subsidiary of Bangalore-based real estate giant Puravankara Projects Ltd, is currently in discussions with four international private equity funds. These talks aim to secure approximately seven hundred fifty crore rupees to facilitate land acquisition for affordable housing projects, as indicated by a source close to the development.
The total cost of the project is estimated to reach eight thousand crore rupees, with seven hundred fifty crore rupees to be raised specifically through private equity funding at the project level. Among the private equity funds involved, one is Asia-based while the other three originate from the United States.
In a recent announcement, Provident Housing revealed plans to invest a total of eight thousand crore rupees across seven affordable housing projects located in Bangalore, Chennai, Hyderabad, Coimbatore, and Mysore during the initial phase of development. The company intends to source the remaining seven thousand two hundred fifty crore rupees through a combination of internal accruals, debt, and customer advances. Additionally, it was noted that the company might offer a stake dilution of 30-40% in each of the affordable housing endeavors.
Looking ahead, Provident Housing has outlined intentions to expand its low-cost housing projects into Delhi, Kolkata, Kochi, Jaipur, Pune, and Nagpur in a subsequent phase. There is a noticeable trend among real estate developers venturing into the affordable housing segment to counter the declining sales in mid-income and high-end apartment markets.
An analyst from a domestic brokerage stated, “In the last 6-12 months, there have been negligible sales in the high-end residential segment. Developers are eyeing the low-income segment as it is also a volumes game.” Just last month, Omaxe, based in Delhi, announced a staggering investment of ₹8000 crore to develop approximately ten lakh low-cost houses over the next decade.
Currently, Puravankara Projects boasts a substantial land bank exceeding one hundred twenty-five million square feet, with nearly 65% of this land situated in Bangalore. The company is in the process of developing around twenty million square feet dedicated to both residential and commercial projects. A report released in July by Citigroup Global Markets downgraded the rating of Puravankara stock from “buy” to “hold,” lowering the target price from ₹358 per share to ₹212.