Almost all the big mall developers/investors - such as Raheja-owned Inorbit Malls, Xander-APG joint venture Virtuous Retail South Asia (VRSA), property developer Prestige Estates Projects, and Blackstone-owned Nexus Malls - are looking to double their space in a year or two.
Mall developers are adding properties in a big way despite lower discretionary income in the hands of consumers and competition from e-commerce firms.
Almost all the big mall developers/investors - such as Raheja-owned Inorbit Malls, Xander-APG joint venture Virtuous Retail South Asia (VRSA), property developer Prestige Estates Projects, and Blackstone-owned Nexus Malls - are looking to double their space in a year or two.
The country is expected to see a mall space addition of more than 65 million square feet (sq. ft) by the end of 2022.
Of that, nearly 72 per cent will be in the top seven cities.
About 15 million sq. ft will be deployed by the end of 2020, said Anuj Kejriwal, managing director and chief executive officer (CEO), Anarock Retail, a retail-focused property consultancy.
This new supply is also being driven by institutional investors, including private equity (PE) players, who invested almost $2.1 billion in Indian retail between 2015 and the third quarter of 2019, Kejriwal said.
Early this week, VRSA, owned by PE fund Xander and Dutch pension fund manager APG, bought two malls from Tata Realty and Infrastructure, one each in Amritsar and Nagpur.
It also bought a piece of land from textile company Raymond to take the portfolio to 7 million sq. ft.
It is developing another 5 million sq. ft in shopping malls in Delhi and Mumbai, and opening a mall in Bengaluru soon.
Rajneesh Mahajan, chief executive at Inorbit Malls, known for its mall in the Malad area of Mumbai, said the company was aiming to grow its portfolio to 4-5 million sq. ft, from the present 2.5 million sq. ft.
It is planning to construct a mall of more than a million sq. ft in size in Mumbai next year.
“We believe with rapid urbanisation and the growth of organised retail, the demand for quality real estate will be on the rise.
"We are looking forward to expand our footprint and wish to double our portfolio in coming few years,” Mahajan said.
Bengaluru-based Prestige Estates Projects, which has nine operational malls with an area of 4.1 million sq. ft, is coming up with seven more with an area of 4 million sq. ft in Bengaluru, Chennai, Kochi, and Kakkanad (in Kerala).
The Bengaluru mall will be the largest one in its portfolio, said V Muhammad Ali, CEO, Prestige Group (Retail).
The firm is planning to have 25 malls with a space of 15 million sq. ft by 2023, Ali said.
Blackstone-owned Nexus Malls, which owns around 6 million sq. ft of mall space, said it wanted to double it through acquisition.
According to sources, it could also float a real estate investment trust.
An email sent to Nexus Malls did not elicit any response.
Though the supply of malls may be booming, demand for retail properties has taken a beating this year.
Recently, Anarock said the leasing of retail spaces had come down by 35 per cent in 2019 due to slowdown in automobiles, fashion, and telecom, which are the biggest tenants of malls.
But investors and developers don’t seem to agree with the Anarock view. Ali said Prestige’s occupancy level was more than 95 per cent across all the Forum malls in Tier 1 and Tier 2 cities and growing, and the firm expected similar occupancies in upcoming malls.
Mahajan of Inorbit said it was seeing 100 per cent occupancy for the past couple of years.
Experience centres
Mall developers such as Prestige and VRSA are developing malls as not just malls but experience centres for shoppers.
Forum Shantiniketan-Whitefield, the Prestige Group’s newest mall, houses a performance theatre, an outdoor event area for live performances, and an amphitheatre.
The mall houses an eclectic brand mix and the finest food and beverage options in the city under one roof on one of the prime rental spaces in the malls, the ground floor. Its mall in Falcon City, in Bengaluru, is developed as an experience centre, Ali said.
VRSA plans to invest more capital and resources in repositioning and rebranding Trilium shopping malls as community-centric, flagship VR centres.
“After the repositioning, we expect these centres to address the aspirations of the local communities of Amritsar and Nagpur, and provide world-class retail, entertainment, and urban infrastructure that will strengthen the international standing of these cities as major tourist hubs,” said Sid Yog, founder and chairman of the board at VRSA.
Photograph: Danish Siddiqui/Reuters
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