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Global Reach
Global credit tightening and rising inflation in 2008 slowed growth, especially in the housing market,
where prices had jumped 25% in 2005 and kept rising. Lenders, meanwhile, are struggling to
put in place the credit evaluation, title due diligence and collection infrastructure to accommodate
unprecedented mortgage demand. Recently, planned IPOs have been cancelled and
expected REIT listings withdrawn. Property prices in India’s large cities fell 25–30% over late
2008 and early 2009 but, more recently, developers are reporting price increases of 15–30% from
these lows as demand returns.
It is in this context that Bay Area architecture, construction and urban planning firms have
entered a dynamic and complex emerging market.
Bay Area Connections
Roughly one-fourth of the California Public Employees’ Retirement System (CalPERS) $600 million
investment in India at the end of 2007 (see the Bay Area Connections section of Chapter 7) was
in two real estate investment funds: $100 million in the IL & FS India Realty Fund launched by
IL & FS Investment Managers, the private equity arm of India’s Infrastructure Leasing and
Financial Services, Ltd.; and $50 million in the SUN-Apollo India Real Estate Fund, a joint
venture between Indian family-owned diversified business conglomerate SUN Group, and U.S.
property investment group Apollo Real Estate Advisors.
The initial IL & FS India Realty Fund (IIRF) was among the first to seek real estate investment
funding in the U.S. Originally structured to raise $300 million, it was oversubscribed
and closed in June 2006 with $525 million, including investments from CalPERS
and the Oregon Public Retirement Fund. The IIRF has targeted a range of property market segments
in India, including office, retail, condominiums, integrated townships and special economic
zones. San Francisco-based Presidio Partners LLC, founded in 2003 by members of the Banc of
America LLC Real Estate Private Equity Group, was the exclusive representative for the initial IL
& FS fund. A second IL & FS fund closed in late 2007, raising another $578 million.
San Francisco architecture/design firm Gensler decided in 2006 that it needed to be in
India, as many U.S. clients such as Legg-Mason, UBS, and Goldman-Sachs had been expanding
their presence there. Managing principal Daniel Winey says the firm first contacted
Indian interior design and space planner Space Matrix, using them as architect-of-record in
India. (Foreign architecture firms are required to work with Indian counterparts beyond the design
drawing phase in a project; Indian firms typically take the completed design drawings and work
with developers from that point on, preparing final construction drawings and assisting with permits
as needed.) While development opportunities for foreign architects are ample, India has
started to generate its own high-end architectural firms such as Morphogenesis. Leading Indian
firms have a growing client base that makes working as executive architect with foreign firms less
attractive and is spurring intensified competition.
Gensler is a participant—along with San Francisco landscape architects Hargreaves
Associates, New Delhi-based Creative Group, and lead architectural firm Frederic
Schwartz Architects of New York—in the expansion and modernization of the Chennai
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