Phoenix Mills to more than dou­ble its of­fice port­fo­lio

Hindustan Times (Chandigarh) - Estates - - ESTATES - Bidya Sa­pam bidya.slivemint.com n

MUM­BAI: Phoenix Mills Ltd, which mostly builds malls, is plan­ning to more than dou­ble its of­fice port­fo­lio to 3.5 mil­lion sq.ft in four years, joint man­ag­ing di­rec­tor Shishir Shri­vas­tava said.

The com­pany owns around 6.5 mil­lion sq.ft re­tail space in seven cities, in­clud­ing Mum­bai, Pune, Ben­galuru and Chen­nai. Most of them are malls, built as part of mixed-use de­vel­op­ment.

It also owns around 1.5 mil­lion sq.ft of of­fice space at Kurla in Mum­bai.

“We want to ex­pand our of­fice port­fo­lio to about 3.5 mil­lion sq.ft. It will take about four years to build that kind of space. The of­fice build­ings would be built in the ex­ist­ing mixed-use de­vel­op­ments,” Shri­vas­tava said in an in­ter­view.

A mixed-use de­vel­op­ment may house re­tail, of­fice and res­i­den­tial spa­ces within the same project.

With this, Phoenix Mills joins large de­vel­op­ers such as Lodha Group and Oberoi Realty Ltd which are build­ing of­fice tow­ers to cater to ris­ing de­mand, even as the res­i­den­tial prop­erty mar­ket stag­nates.

In the nine months ended De­cem­ber, the BSE-listed firm gen­er­ated around 67% of its rev­enue from re­tail busi­ness while com­mer­cial of­fice ac­counted just around 4%. Around 30% of its over­all rev­enue came from its hos­pi­tal­ity and res­i­den­tial seg­ments.

The new com­mer­cial of­fices would be built across all its ex­ist­ing “re­tail-led mixed used de­vel­op­ments” in Pune, Ben­galuru and Chen­nai.

Phoenix plans to add an of­fice tower at the com­mer­cial area at Mum­bai’s Lower Parel, where it op­er­ates High Street Phoenix mall and St Regis Ho­tel, Shri­vas­tava said.

He did not say how much the com­pany will in­vest to build these as­sets, but said it would be funded mostly through in­ter­nal ac­cru­als.

De­mand for pre­mium of­fice space is cross­ing sup­ply in ma­jor cities.

Ac­cord­ing to a 19 Fe­bru­ary re­port by bro­ker­age firm ICICI Se­cu­ri­ties, net ab­sorp­tion of prime of­fice space in 2017 across seven cities in­clud­ing Mum­bai, Delhi-Na­tional Cap­i­tal Re­gion (NCR) and Ben­galuru stood at around 24 mil­lion sq. ft against a sup­ply of around 23.5 mil­lion sq. ft dur­ing the year.

This year, net ab­sorp­tion of of­fice space is likely to touch 28 mil­lion sq. ft, the re­port said.

Be­sides, the com­pany is also on ex­pan­sion mode to ramp up its re­tail busi­ness.

Last year, Canada Pen­sion Plan In­vest­ment Board (CPPIB) said it would in­vest around Rs1,600 crore in Is­land Star Mall De­vel­op­ers Pvt. Ltd, a unit of Phoenix Mills.

Most of the funds would be de­ployed be­fore the end of this year in pur­chas­ing land to de­velop malls or ac­quir­ing ex­ist­ing re­tail as­sets.

“Our rental in­come in the last fi­nan­cial year was around Rs 770 crore. Go­ing by the in­di­ca­tors in the last nine months, this year’s rental in­come would grow at least by around 11-12%,” Shri­vas­tava said

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