Tata Housing Development Company has initiated talks with real estate developers in Tanzania and Kenya, where it has laid out plans to develop mixed-use projects spread out over 70 acres. The company will execute its East African projects in partnership with the governments of these countries and local developers.
For its overseas projects and markets, the company has announced that it intends to establish an investment platform for private equity players worth $200 million. Brotin Banerjee, MD & CEO at Tata Housing says, “Currently, we are talking to multiple private equity entities to set up a separate investment platform for overseas opportunities. The entire $200 million can be raised in one or two tranches depending on opportunities. We will resort to capital-light model of development through joint ventures and joint developments.”
The Tata Group company will develop two projects in Dar es Salaam, Tanzania’s commercial capital, and the third in Nairobi, Kenya. With a total estimated investment of Rs.1,000 crore over the next 3 years, development on these projects is expected to begin by December, 2017. Term sheets for the two projects have already been signed and the agreement could be concluded in its entirety by the end of June, 2017 or earlier.
Steady macroeconomic conditions in the region have resulted in the Kenyan property market remaining relatively stable throughout last year, according to Knight Frank’s Africa Report. According to the Kenyan government, however, there is an acute shortage of at least 200,000 residential units per year. To counteract this deficiency, the government has incentivized tax structures for major developers and also taken measures like upgrading slums. Tata Housing’s entry could mark the start of a mutually beneficial arrangement that could benefit all parties involved.
Tata Housing Development Company has previously demonstrated its competence in foreign markets through the success of its projects in Sri Lanka and the Maldives. To this end, Brotin Banerjee says, “Given the early success in two of our overseas projects in Sri Lanka and Maldives, we have decided to continue expanding our international footprint. For now, we are starting with Kenya and Tanzania in East Africa, which is a promising market with robust pent-up demand and good brand visibility.”