US private equity firms Starwood Capital and Walton Street Capital have announced they will partner with Indian property developer Shriram Properties to develop a $1.25 billion (€900 million) township in Kolkata, India.
The three firms will each own a 33 percent stake each in Bengal Shriram Hi-Tech City Private, the special purpose vehicle to develop the integrated IT township and auto park on the former site of Hindustan Motor’s Uttarpara plant in West Bengal.
The township, built on 20 million square feet of land, will include residential, retail and commercial real estate properties. Hindustan Motors will retain about one percent stake in the project. The company recently entered into an agreement with Bangalore-based Shriram Properties to jointly develop the land. Construction of the project should begin within nine months and will be completed in six years.
Kolkata is an IT-heavy area, with the IT and ITeS sector contributing 80 percent absorption of the commercial space. Commercial space measuring 7,00,000 sq ft is expected to come up by the end of 2007, according to a recent report by property consultancy DTZ. The peripheral areas of the city have seen much higher vacancy levels than that of the central business district.
The city has seen vacancy levels of four per cent in the central business district and areas outside the central business district have seen vacancy levels of five per cent. The peripheral areas have seen vacancy of 12-15 per cent due to the new supply coming in. The vacancies have remained stable quarter on quarter but have decreased year-on-year, according to the report.