Hindaun City, Rajasthan
64%
Asset CAGR
52%
Buying Alpha
18Mos
Vintage
1. The Investment Thesis
"Unlocking asymmetric value in Tier-3 retail infrastructure by bridging the gap between raw land and organized commercial supply, executing an 'Investor-Developer' strategy to secure a high-yield exit at the market peak."
In 2007, Hindaun City represented a classic market dislocation: rising local purchasing power but a complete absence of organized retail infrastructure. The local market was fragmented, consisting mostly of unorganized street shops.
We identified a 10,650 sq yd land parcel at a favorable basis (70 Lacs) and acted as the developer ("Builder Acting") to construct a 3-floor, 150-shop complex. This strategy allowed us to control the entire value chain—from land acquisition to construction to leasing. By delivering a modern, high-density commercial asset, we attracted tenants at a premium, achieving a confirmed 8% rental yield.
This yield served as the proof of value for the asset. Rather than holding for the long term, we capitalized on the asset's income potential and the robust real estate liquidity of the era to execute a strategic full exit in June 2008. This timing secured capital gains just prior to the global financial downturn, validating the strategy of rapid execution in underserved markets.
2. Valuation Bridge
| Line Item | Amount (PER SQ FT) | Notes |
|---|---|---|
| Land Acquisition | ₹73 | Basis: Total purchase price of ₹70 Lacs. Extremely low entry point for unorganized land. |
| Approvals & Liaising | ₹25 |
| Direct "Builder Acting" role minimized official costs but required significant time investment. |
| Civil Construction | ₹450 | Low-cost Tier-3 construction structure (2007 rates). Core & shell focus. |
| Marketing & Leasing | ₹55 | High Friction: Costs incurred to convince local retailers to adopt vertical retail (2nd/3rd floors). |
| Total Cost Basis | ₹603 | The "Wholesale" Price. This is the total capital employed to create the asset. |
| Buying Alpha | ₹497 | The "Developer Spread." The value created by successfully executing the project and proving the 8% yield. |
| Exit Valuation | ₹1100 | The "Retail" Price. Sale price in June '08 based on the capitalized value of the 8% rental yield. |
Financially, the thesis played out perfectly—the June 2008 exit was a masterstroke of timing that insulated us from the coming crash. Operationally, however, the 'Builder Acting' role was far grittier than our spreadsheets anticipated. Executing a 3-floor complex in Hindaun City exposed severe gaps in the local supply chain and skilled labor market, requiring constant micromanagement to control costs. Furthermore, leasing 150 shops was a battle; convincing local retailers to move from street-level to a vertical format (2nd and 3rd floors) took aggressive persuasion. We won on the yield (8%), but the execution was a fight for every square foot.
— BK Agarwal, Chief Advisor & Partner
Execution Timeline
Feb 2007
Land Acquisition
Apr 2007
Construction Commencement
Jan 2008
Construction Completed
Jun 2008
Exit Realized
All units were leased for a 3+3 year lease period.