UPDATE 1-Sobha sells 40 pct in Bangalore project for $10 mln

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MUMBAI, July 2 (Reuters) - Real estate firm Sobha Developers Ltd (SOBH.BO: Quote, Profile, Research) said on Wednesday it has sold 40 percent stake in an upcoming Bangalore project to Dubai's Pan Atlantic LLC for $10 million (433 million rupees).

Sobha plans to develop a 1.7-million-sq ft residential township at the plot in south Bangalore. A senior company official said the present value of the land is estimated at 1.05 billion rupees, which has been used as the basis for the deal valuation.

The company expects sales realisation of 6 billion rupees from the project, he said.

Recent months have seen a spate of private equity deals in the Indian real estate sector, as developers, faced with a cash crunch on one hand and a slowdown in demand due to high interest rates on the other, try to unlock value in ongoing projects.

In April, Parsvnath (PARV.BO: Quote, Profile, Research) sold 30 percent in a Mumbai project to Euronext-listed Yatra Capital and Saffron India Real Estate Fund for $46 million, while Unitech (UNTE.BO: Quote, Profile, Research) sold 50 percent in a Mumbai project to Lehman Brothers in June, for $175 million.

Sobha plans to start construction at the Bangalore project by the next quarter, the official said.

Shares in the company extended gains to a high of 288.90 rupees, and were trading at 285 rupees, up 8.3 percent in a strong Mumbai market.

(Reporting by Prashant Mehra and Kaustav Roy; editing by Sunil Nair)