Where one size fits none: Developers plan a dozen mega malls
DLF, the country’s largest property developer, is planning to build a mega mall in Gurugram. According to sources, it will be bigger than its 2-million square (sq.) feet (ft) Mall of India in Noida, as it has a larger plot in Gurugram.
Mall of India in Noida is already the country’s largest mall, spread across seven floors and divided into five zones and has 400 brands.
DLFisnotalone. Faced with fierce competition from e-commerce companies and fatigue for normal shopping centres, leading mall developers, such as Phoenix Mills and Lake Shore, backed by global private equity( PE) firms, are building malls with an area of over 1 million sq. ft each, which they are marketing as shopping destinations for all under one roof and experience centres.
According to Anarock Property Consultants, over a dozen malls with 1 million sq. ft of area are coming up in the country, most of which will be completed after 2019.
For instance, Mumbai-based Phoenix Mills, which has a joint venture (JV) with Canada’s Canada Pension Plan Investment Board, is developing four malls of 1 million sq. feet each in Pune, Bengaluru, Lucknow, and Indore.
“They are expected to become the preferred district consumption hubs for the cities that they are present in,” Shishir Shrivastava,
joint managing director, Phoenix Mills, told Business Standard.
Shishir Baijal, chairman of Knight Frank, said: “Malls or shopping centre real estate has stagnated over the years due to the advent of the e-commerce market and dearth of quality good mall supply.”
He said shopping centres would have to evolve as retail destinations to stay ahead of the curve and survive in the digital age. “Retailers and developers will have to provide for more than just a shopping experience to the customers, and strive for not just creating a shopping centre, but a ‘shoptainment’ centre,” Baijal said.
Abu Dhabi Investment Authority-backed Lake Shore India Advisory, promoted by retail property veteran Ashwin Puri, is looking to develop malls in the Mumbai Metropolitan Region, Gurugram, Ahmedabad, and Hyderabad.
For the Ahmedabad project, Lake Shore is joining hands with local real estate developer Ganesh Housing, which owns 10 acres in the city. They plan to set up a 1 million sq. ft mall there.
In Gurugram, Lake Shore has partnered Harinder Singh of Reach Group to develop 1 million sq. ft of retail developments, said sources. The plan is to build the mall in two phases. Lake Shore also has plans to build a 1 million sq. ft mall in Hyderabad. The mall will have more food and entertainment centres and larger indoor and outdoor spaces where people can spend time, said sources.
Even investors such as Xander are betting on larger malls. Virtuous Retail South Asia, a JV between Xander and Dutch fund APG, is close to buying 1 million sq. ft mall in Mumbai from real estate developer Omkar for ~23 billion, reports said.
In May 2017, Virtuous had acquired the 2-million sq. ft North Country Mall in Chandigarh from PE fund Sun Apollo and US-based JJ Gumberg for ~7 billion.
However, Blackstone-backed Nexus Malls has bought malls of all sizes. For instance, it has bought 400,000 sq. ft Treasure Island Mall and 200,000 sq. ft Treasure Island Next in Indore, 400,000 sq. ft mall in Pune, and so on.
“We have bought smaller malls also. In smaller cities, malls of bigger size don’t necessarily work. Sizes should justify catchment and returns,” said a source close to Blackstone.