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IN A surprise move, UK-based property company Liberty International yesterday announced its first foray into the retail property market in India.

The company, which so far has focused on the UK and US, said it had signed a joint-venture agreement with Provogue in India to develop and manage prime regional shopping centres for the “growing organised retail sector”.

Liberty International would take a 25% shareholding in Prozone Enterprises, a subsidiary of Provogue. Prozone is already developing large-scale regional shopping centres in India.

Liberty International CE David Fischel said yesterday from London that it was a “relatively small investment”.

“We are testing the water in a market that has tremendous growth potential. The growth rates in India are pretty spectacular,” said Fischel.

He said Prozone Enterprises was working on two shopping centre developments with more in the pipeline.

Prozone-Liberty, as the joint venture will be known, was planning to initially build six shopping centres bigger than 50000m². Fischel said that under Indian law, a foreigner could invest in real estate only if it was bigger than 50000m².

Liberty International’s equity contribution to the six centres would be about £25m. “We’ve been looking at India for some time now. What has made it attractive for us is the potential size of the market,” said Fischel.

Andre Stadler, MD of Catalyst Fund Managers, said Liberty International’s joint venture was a “small, pioneering investment”.

“I think it represents 0,33% of their assets but with potential for long-term opportunities,” said Stadler. There would be “many hurdles along the way”, which was the “characteristic of an undeveloped retail market”.

“Retailing and retail brands continue to globalise and India obviously has a fast-growing middle-income market.

“How much management time and effort will be required and whether that will justify the opportunity, remains to be seen.”