Orbit May Sell Shares to Build $11 Million Apartments in Mumbai

Jan. 20 (Bloomberg) -- Orbit Corp., India’s best-performing real estate stock, plans to raise funds from institutions and a buyout firm to build apartments costing as much as $11 million in a nation with Asia’s second-largest number of billionaires.

Orbit may sell as much as 3.5 billion rupees ($76.3 million) of stock to institutions in the first half of the year, Managing Director Pujit Aggarwal said in an interview. The Mumbai-based developer is close to getting 1.75 billion rupees from a private- equity fund to build 200 acres of luxury villas at Mandwa, 33 kilometers (21 miles) from Mumbai along the Arabian Sea, he said.

Demand for luxury apartments is rising as the biggest rally in stocks in 18 years, doubling of copper, sugar and lead prices, and record rice harvests boost the ranks of the affluent in the second-fastest growing economy among the Group of 20 nations. The South Asian nation has 84,000 millionaires, according to the 2009 World Wealth Report by Cap Gemini SA and Merrill Lynch Wealth Management.

“Mumbai is the deepest market, the demand is phenomenal and any money that comes in will be used for further growth,” Aggarwal, 37, said in an interview. “If we can manage funds from internal resources then we may defer such a share sale.”

Orbit’s shares have surged sevenfold in the past 12 months, making it the best-performing stock in the Bombay Stock Exchange Realty Index. They rose 2.1 percent to 331.5 rupees in Mumbai yesterday.

India’s benchmark stock index, the Sensex, gained 81 percent in 2009, while the S&P GSCI Index of 24 raw materials rose 50 percent, the most since at least 1971.

Home to Billionaires

About 40 percent of India’s 52 billionaires live in Mumbai, according to Forbes magazine. The city is home to India’s two main stock exchanges, its biggest trading centre for diamond, bonds, currency, gold and other commodities. It is also the main centre for the world’s most prolific movie-making industry. Two- thirds of Orbit’s properties are in central and south Mumbai.

“Areas such as south Mumbai and south Delhi always command a certain premium,” said Vivek Dahiya, the chief executive of New Delhi-based GenReal property advisory firm. “One always finds buyers here irrespective of the cycles.”

The number of millionaires in India and China are expected to triple between 2008 and 2018, according to the Merrill Lynch and Cap Gemini wealth report.

About half of the 16 million residents of Mumbai, the commercial capital of the world’s second-most populous nation, live in slums. That’s more than the population of Switzerland.

Orbit, which has built 500,000 square feet of space, mainly by tearing down old and dilapidated buildings, is building 3.2 million square feet, Aggarwal said. Orbit will start developing another 3 million square feet over the next four quarters, he said.

“Through the re-development route one can get land for a fraction of the price,” Aggarwal said. “Fresh land in south Mumbai is anyway not available.”

Mumbai has almost 20,000 buildings that are old and crumbling, he said. Developers such as Orbit buy out the residents or offer them alternative homes as per the municipality rules to get the necessary land for luxury homes.