Bollywood capital?

Starwood Capital’s Barry Sternlicht gets specific about the firm’s plans for India—which could include $500 million in investment in real estate on the subcontinent. By Aaron Lovell.

Starwood Capital head Barry Sternlicht is reportedly gearing up to spend more than $500 million in India over the next three years, according to a recent interview in Mumbai.

“We are very excited about investing in India, but it’s going to be the tortoise rather than the hare,” Sternlicht told the Reuters news service in November. “It is going to be slow.” He added that his firm was close to investing $50 million in a residential project in a secondary city.

Sternlicht also indicated Starwood would take a counterintuitive approach to the country. The firm would begin by focusing on smaller cities, eventually moving into larger centers. He also said Starwood would look at making investments in Indian property companies that are looking to expand their hospitality operations overseas.

“I think there is another opportunity for us, which we haven’t talk much about which is to help Indian companies that want to go overseas and expand,” he told the wire service.

It might have been one of the first times Sternlicht has publicly quantified his firm’s interest in India, but he has often said he felt the country has plenty of potential for investors. At PEO sister magazine PERE’s recent conference in New York, Sternlicht said that Starwood saw India as a development play—and one that was attractive for hotel investment.

He added that India was benefiting from increased investor interest across the emerging markets of Asia. “The best thing to happen to India was China,” he told the delegates.

Sternlicht also provided plenty of anecdotal evidence about the challenges facing India, including things like bureaucracy, lack of infrastructure and corruption. “We take people to Knicks games,” he said of investing in the US. “They just pay them.”

Starwood’s entry into India comes as interest in the country continues to grow. Launched last year, a joint venture between New York-based property firm Tishman Speyer and ICICI Ventures, a real estate investment subsidiary of Indian bank ICICI, has reportedly already invested more than $1 billion in the Indian property sector.

Hedge fund Old Lane, private equity giant AEA and infrastructure developer IL&FS have all raised money or plan to commit equity to real estate deal; Apollo Real Estate Advisors is planning to work with India-based Sun Group on a joint venture; and UK-based emerging markets investor Actis is reportedly eyeing its own Indian property vehicle. Meanwhile Xander Real Estate Partners could be close to closing on what might be the largest foreign property investment so far on the subcontinent.