The way out for cash-strapped real estate companies in the face of restrictions on foreign investors and external commercial borrowings now appears to be joint venture partnerships with overseas developers.
The trend for such ventures was set by MGF Developers who tied up with
Emaar in December 2005 for a USD 4 billion investment.
DLF has concluded
a deal on developing two townships with Nakheel of Dubai as a
partner, while Ansal API has worked on a similar arrangement with Deyaar,
the real estate subsidiary of Dubai Islamic Bank. Emaar MGF has further
inked a deal with a subsidiary of the Australian construction and mining
group Leighton Holdings.
More alliances are in the pipeline - DLF is tapping potential
partners in Thailand, Singapore and G.ermany. Unitech and Parsvnath
are also exploring partnerships with foreign developers.
The joint ventures the developers enter into would most probably
follow the Special Purpose Vehicle format, which would ensure
gains for both partners.
With foreign funding options closing
down from every avenue - ECBs, pre-IPO placements and FDI
in real estate - joint ventures appear to be a more secure alternative.
