|By Rajesh Unnikrishnan, The Economic
Knight Ridder/Tribune Business News
Apr. 5, 2006 - MUMBAI, India -- The Dubai-based real estate company, Emaar Group, and its Indian joint venture partner MGF have decided to enter the Indian hospitality sector with an investment of at least $1bn. Emaar-MGF has acquired 15 acres of land in Delhi and Hyderabad together for around Rs 400 crore to set up its luxury hotel chain.
The combine has acquired a 10,257 sq m plot for Rs 199.5 crore and another 8,909 sq m plot for Rs 189 crore in Jasloa at Delhi. In Hyderabad, it is developing a national convention centre cum five star hotel project in collaboration with the Andhra Pradesh government.
"We have plans to set up 10 luxury and 15 to 20 budget hotels in various parts of India in the next 2 to 5 years. We will be investing around $1bn for the hospitality sector foray," Shravan Gupta, managing director, Emaar-MGF told ET. He said that the overall demand for hotels is going up by 10-15 percent annually, and there is a large demand and supply gap which will only widen due to an increase in business travellers and foreign tourists.
Emaar-MGF's move is important because India is currently facing a severe shortage of quality hotel rooms, a crunch that has spurred hotels to raise rates dramatically. A shortage of hotels that meet western standards has led many hotels in major cities such as Bangalore, the country's high-tech hub, to seek three weeks advance notice for bookings.
In cities such as Bangalore, Chennai, Goa and Mumbai, rates went up more than 20 percent last year. In New Delhi, the rates rose almost 50 percent. The average room rent in quality hotels has gone up to $222 in Bangalore, to $110 in Mumbai, and about $130 in New Delhi.
Emaar-MGF has already planned an investment of $4bn in various housing and infrastructure related projects to be taken up in the coming years. "We have already signed an agreement with the government of Punjab to develop infrastructure and integrated township projects with a capital outlay of Rs 4,000 crore," Mr Gupta.
He said that the integrated township in Mohali would be spread over 2,000 acres of land. Up to 80 percent of the land has been acquired and the work will start from this year. Besides those in Mohali, Emaar-MGF would take up projects in Ludhiana, Jalandhar and Amritsar with an initial investment of Rs 1,000 crore.
Emaar-MGF is a 50-50 joint venture with an initial investment of $500m each. The combine was one of the bidders for the Bandra-Kurla convention centre in Mumbai for which the Mukesh Ambani-controlled Reliance Industries won the contract.
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