What are the projects that are you invested into in India?
We have two investments in India: two in NCR and one in Coimbatore. At Gurgaon we are in a group housing project in partnership with ILD. The later is the landowner. We are developing a total of 700 acre of apartment space on a 16-acre plot of land. Second project in NCR is a technology park at Manesar, the Spire Edge. This is in collaboration with A N Buildwell. This will be an office space in a green building.
Third is a 100-acre township for which we are in the process of acquiring licenses. We have also signed MoUs and agreements for four to five other projects for our next phase of investment. These all would be at the regional level.

Overseas companies usually rent their spaces. They hardly buy space in India. Is this beneficial for them?
An overseas company tends to rent the space for a short term. However, once it plans to stay longer, it either expands or increases the rented space. For example Agilent, which is in Manesar, has bought and developed it own office on a 10-acre plot of land. The decision depends on the business model.

How you choose on a location for investing and developing?
We look for places along transit corridors, along railway networks. It makes sense as this facilitates the occupants in terms of connectivity and transportation.

How did your fund start?
Millenium Fund is a part of Millenium Global, which is a Singapore-based firm. It is an alternative investment fund, which means it invests in oil, natural gas, and other commodities. In the ambit of this, India is a very good opportunity. Millenium Spire was set up in Singapore to invest across Asia.

India was the first place where Millennium Spire came for the first time to invest in real estate. And then we set up an office in Japan and India. We are operating from Hong Kong also. In India we plan to expand beyond real estate and infrastructure to invest in other sectors.

How much are you going to invest over a period of one year?
We wish to raise $1 bn over a period of three-four years, in phases. And we expect to give an internal rate of return of up to 25%. So the projects where we would be investing will take around three to four years to be ready for possession. By that time, we will be ready to exit.

Over a period of next one year, the company would be investing around $50 mn across projects. But there are obstacles in making such investments.

What are some of these obstacles?
These obstacles are essentially transparency from investment parties and local developers. The biggest challenge is shortage of skills to manage the portfolio. People are not properly trained. Another problem is of promiscuity of land titles.

People should invest in profit-making projects, not hoard the land. People should develop offices, residential projects, and commercial centres.

Unfortunately, foreign investors coming to India are busy investing in land. Acquiring land is not a solution. One has to develop some project or fund a profit-making project.

And now real estate mutual funds will come to India. What are your primary concerns and suggestions?
I think it's a very interesting idea. There is a lot of primary demand from domestic retail investors. Rather than getting into deals and legalities, person would be investing in a safe mode.

However, the success of such a fund will depend largely upon the transparency of the fund and whether the investors are well aware of the key points.

But in terms of profit, one should look at the product mix. For example, one should look at the fact whether the fund is well diversified across a set of good product mix. For example, if $5 mn is properly diversified over four properties and the same $5 mn is invested in one single project. In such a case the earlier would be a better deal.

It is very good thing for pensioners, and cautious investors. But SEBI should clearly define the norms for such real estate funds.

What do you suggest then?
According to me, SEBI should check that such funds are not investing into plot auctions, land deals, and acquisition of land. At least for foreign investors there is a cap on the investment. But if a domestic fund comes into such a system, then it is going to affect the land price of that market where it will buy the land. The prices will shoot up, which is not a healthy trend.

Are you marketing these projects?
No, but wherever needed our team of technically skilled professionals help them to formulate marketing strategies. We are not passive investors. So we synergise ourselves with the developer for sales.

What is the minimum locking period for your fund?
Our fund has five year plus two additional six months of extension. The extra one year in six and six months is an extension.

How much internal rate of return (IRR) are you expecting?
We are expecting 25 per cent of IRR for our overseas investors. And that would translate to unleveraged IRR of close to 40-50 per cent.

So when can we have something for Indian investors?
We are looking for such investments keeping in mind the Indian investors. Over a period of 3-4 years you might see something in this direction.

Will your Manesar project be on a complete lease basis or also on sale?
It will be a combination of sale and lease. We are eagerly waiting the REIT structure. This will the allow us not only to develop the property, but also run them and hold them.