The­con­tin­u­ous rise of In­dian malls New IBC amend­ment puts home­buy­ers at par with fi­nan­cial cred­i­tors

De­spite the ob­vi­ous threat of e­com­merce, malls con­tinue to open in tier­II In­dian cities giv­ing or­gan­ised re­tail a big boost

HT Estates - - FRONT PAGE - Anuj Puri let­ters@hin­dus­tan­times.com The au­thor is Chair­man – ANAROCK Prop­erty Con­sul­tants Priyanka Mit­tal and Prashant K Nanda let­ters@hin­dus­tan­times.com Gireesh Chan­dra Prasad con­tributed to this story.

Rapid ur­ban­iza­tion and dig­i­ti­za­tion, in­creas­ing dis­pos­able in­comes and life­style changes of the mid­dle-class are lead­ing to a ma­jor rev­o­lu­tion in the In­dian re­tail sec­tor, which is pegged to grow by 60% to reach US$ 1.1 tril­lion by 2020. The Gov­ern­ment has clearly hit the bulls­eye by eas­ing the FDI norms in the re­tail sec­tor over the past few years.

Re­act­ing to the im­mense op­por­tu­ni­ties and di­min­ish­ing en­try bar­ri­ers into the In­dian re­tail scene, over­seas re­tail­ers are now ex­pand­ing ex­u­ber­antly. And it’s not just the met­ros they’re tar­get­ing - even tier 2 cities like Ahmed­abad, Chandi­garh, Luc­know and Jaipur, to name a few, are open­ing up for or­ga­nized re­tail in a big way. Malls are lit­er­ally mush­room­ing across the In­dian sub­con­ti­nent.

READY, STEADY – GROWTH!

The Great In­dian Mall Boom be­gan in­nocu­ously enough in the early 2000s, with just three malls in ex­is­tence in the en­tire coun­try.

Ther­est is, as they say, his­tory as In­dian shop­pers slowly but surely de­vel­oped a pen­chant for shop­ping in clean, vi­brant, cli­mate-con­trolled and highly en­abled malls rather than in the usual ‘ki­rana’ shops and scat­tered in­di­vid­ual stores.

De­spite many hic­cups, in­clud­ing the re­ces­sion of 2007-2008 and the ad­vent of e-com­merce busi­nesses, the num­bers vouch­safe that In­dian malls are def­i­nitely here to stay.

By 2017-end, there were more than 600 oper­a­tional malls across the coun­try. In­ter­est­ingly, more than 30 new shop­ping malls cov­er­ing nearly 14 mil­lion sq. ft. of area are ex­pected to come up across top eight cities by 2020.

WHAT KEEPS IN­DIA’S MALLS TICK­ING?

To­day’s top-per­form­ing shop­ping malls are es­sen­tially mixe­duse busi­nesses that in­cor­po­rate so­cial en­ter­tain­ment op­tions, pro­vide a unique ap­peal along with a con­sid­er­able depth of shop­ping ex­pe­ri­ence, and are in prime des­ti­na­tions that are eas­ily ac­ces­si­ble by both pub­lic and pri­vate trans­port.

More­over, the abil­ity to an­tic­i­pate and align with chang­ing con­sumerneeds­make­mallssuc­cess­ful to­day.

De­spite the con­sid­er­able progress from its hum­ble be­gin­nings, the In­dian mall story is just un­fold­ing and will evolve fur­ther.

If we look at some of the most in­no­va­tive mall de­vel­op­ments glob­ally, we see ad­vanced fea­tures like in­door ski-hills, water parks, theme parks, sci­ence cen­tres, zoos and even shoot­ing ranges, amon­gothers. In­dia is catch­ing up, al­beit with an eye on the essen­tial In­dian cul­ture and mind­set – which again is very re­gion-spe­cific.

PROM­I­NENT MALLS IN IN­DIA

More than any­thing else, In­dian malls have be­come stand-alone brands. To stay rel­e­vant, they have adopted new-age tech­nolo­gies from the de­sign and con­struc­tion stage to the fi­nal en­duser ex­pe­ri­ence, which is what drives foot­falls. Some of the lead­ing malls in and around NCR that of­fer a unique ex­pe­ri­ence to con­sumers in­clude:

DLF’s Mall of In­dia in Noida has an in­door ski-range (Ski In­dia).

The Great In­dia Place in Noida, pop­u­larly known as GIP, has a water park and one of the best kids play zones in the busi- ness (Worlds of Won­der and Kidza­nia).

The Grand Venice Mall in Greater Noida is a tourist des­ti­na­tion with its Vene­tian theme which in­cludes gon­dola rides and pro­vides a dis­tinctly Euro­pean feel.

The sec­ond-largest mall in the coun­try in terms of area, World Trade Park in Jaipur has a unique dis­play fea­ture wherein 24 pro­jec­tors cre­ate a sin­gle image on its ceil­ing.

Other prom­i­nent malls that are do­ing ex­cep­tion­ally well in the North in­clude DLF Prom­e­nade and Se­lect City in Saket, DLF Cy­ber­hub and Am­bi­ence Mall in Gur­gaon, and DLF City Cen­tre in Chandi­garh.

Down south, Lulu In­ter­na­tional Mall in Kochi - touted to be the largest mall in the coun­try - is cre­atively us­ing tech­nol­o­gy­based nov­el­ties to of­fer a highly dif­fer­en­ti­ated ex­pe­ri­ence. These in­clude New-age tech­nolo­gies like geo-fenc­ing, bea­con tech­nol­ogy and Au­to­matic Num­ber Plate Recog­ni­tion (ANPR). It also uses tech­nol­ogy to in­ter­act with its cus­tomers and keep them abreast on the lat­est ac­tiv­i­ties within the mall.

An­other case in point is the Phoenix Mar­ket City mall chain in Ban­ga­lore and Chen­nai - mar­quee de­vel­op­ments in the re­tail real es­tate space that have es­tab­lished them­selves as life­style and en­ter­tain­ment des­ti­na­tions. These malls of­fer a very holis­tic and pre­mium ex­pe­ri­ence for re­tail, en­ter­tain­ment and movies, and F&B.

Buoyed by the phe­nom­e­nal suc­cess of malls across the met­ros, tier 2 cities like Thiru­vanan­tha­pu­ram and Man­ga­lore have also em­braced the mall cul­ture, with the for­mer see­ing the launch of Mall of Tra­van­core early this year.

The West­ern re­gion of the coun­try has also scripted sev­eral suc­cess chap­ters in the In­dian Mall Story.

The Mum­bai Metropoli­tan Re­gion (MMR) is home­to­someof the most iconic shop­ping cen­tres such as Inor­bit Mall, High Street Phoenix and In­fin­ity Mall, among oth­ers.

Neigh­bour­ing Pune, with its more gen­er­ous land avail­abil­ity, is also home to prom­i­nent malls like Phoenix Mar­ket City, Amanora Town Cen­tre and Sea­sons Mall (with the lat­ter two cur­rently suc­ceed­ing in the same catch­ment – a dis­tinct rar­ity in the highly com­pet­i­tive re­tail en­vi­ron­ment).

E-COM­MERCE VS MALLS – CO­EX­IS­TENCE IS KEY

To­day, no­ma­ll­can­de­pend­solely on shop­ping as its prime source of rev­enue-gen­er­a­tion and foot­falls. Nor can they, strictly speak­ing, sur­vive just on the ba­sis of be­ing crowd-pullers. Malls need to transform into com­mu­nity spa­ces to stay rel­e­vant to the in­creas­ingly dis­cern­ing In­dian cus­tomers.

Be­sides an am­bi­ent shop­ping, In­dian con­sumers ex­pect com­fort and en­able­ment at ev­ery level from their mall visit. Mall de­vel­op­ers are on a steep learn­ing curve as they try to fig­ure out how to inspire cus­tomers, who are not just shop­pers but ex­pe­ri­ence-seek­ers, to not only stay longer but to re­turn. As a re­sult, In­dian malls to­day are con­stantly striv­ing to be­come prom­i­nent ‘shop­per­tain­ment’ lo­ca­tions.

And they are suc­ceed­ing at this. Be­ly­ing the ini­tial angst about e-com­merce killing In­di­ans’ ap­petite for mall- based shop­ping, In­dian malls have ac­tu­ally emerged stronger than ever by pro­vid­ing ex­pe­ri­ences that couch-based shop­ping sim­ply can­not match.

As of now, e-com­merce and malls have learned to co­ex­ist in In­dia by fo­cus­ing on their own in­her­ent strengths and ad­van­tages rather than on try­ing to kill each other off.

The re­sult is that shop­pers are more­spoiled for choice than ever be­fore.

Of course, mat­ters can change quite quickly in the rapidly evolv­ing world of or­ga­nized re­tail, and a lot de­pends on Gov­ern­ment ac­tions in terms of:

In­fra­struc­ture (at the lev­els of trans­port, lo­gis­tics and ware­hous­ing) and

Pol­icy (in terms of mak­ing the In­dian mar­ket a great place for do­mes­tic and global re­tail­ers to be).

So far, the cur­rent Gov­ern­ment has been pretty proac­tive on both these fronts – and for now, the Great In­dian Mall Story is alive, kick­ing and firing on all cylin­ders. NEW DELHI The Union cabi­net re­cently ap­proved an or­di­nance to amend the In­sol­vency and Bank­ruptcy Code (IBC) 2016 to put home­buy­ers on par with fi­nan­cial­cred­i­tor­swhen­de­cid­ing the fate of real es­tate firms that havede­fault­e­donloan­pay­ments. The or­di­nance will come into force once it is ap­proved by the pres­i­dent. Un­til now, home­buy­ers were treated as un­se­cured cred­i­tors who­cameafter­se­cured and in­sti­tu­tional cred­i­tors in terms of pri­or­ity for re­cov­ery of dues. “The­cab­i­net has­ap­proved it,” said law min­is­ter Ravi Shankar Prasad af­ter a meet­ing of the cabi­net. Hede­clined­to­give fur­ther de­tails.

The­moveis­like­ly­topos­i­tively im­pact­the­claim­sofhome­buy­ers in pend­ing court cases against lead­in­greal es­tate groupssuchas Jaypee In­frat­ech and Am­ra­pali Group. The changes were based on sug­ges­tions made by a 14-mem­ber in­sol­vency law com­mit­tee to the min­istry of cor­po­rate af­fairs. Thep­anel, chairedby sec­re­tary In­jeti Srini­vas, madea strong case for treat­ing home­buy­ers as fi­nan­cial cred­i­tors, en­abling them to take builders de­fault­ing on­their obli­ga­tions to a bank­ruptcy court and de­cide their fu­ture along with lenders.

Le­gal and real es­tate ex­perts hailed the or­di­nance as a move that will ben­e­fit mil­lions of home­buy­ers. “The de­ci­sion to in­clude home­buy­ers un­der the am­bit of fi­nan­cial cred­i­tors... will be re­ceived with a cheer. Sev­eral de­vel­op­ers have mis­ap­pro­pri- at­ed­fund­sofhome­buy­ers, whose po­si­tion in the re­sult­ing in­sol­vency pro­ceed­ings has been the topic of spec­u­la­tion for a while now. The de­ci­sion to end this un­cer­tainty is a step in the right direc­tion,” said Pu­nitDut­tTyagi, ex­ec­u­tive part­ner at law firm Lak­sh­miku­maran & Srid­ha­ran At­tor­neys. Tyagi, how­ever, said that banks may not wel­come the de­vel­op­ment as their dom­i­nant po­si­tion in the pro­ceed­ings may be threat­ened. Ramesh Nair, chief ex­ec­u­tive of­fi­cer and coun­try head­of­real es­tate con­sul­tant JLLIn­dia, said the­movewil­l­ben­e­fit home­buy­ers and help re­vive the stag­nant real es­tate mar­ket.

“Thiswill in­fuse con­fi­dence in the home­buy­ers to in­vest their mon­ey­a­sit­gives­thempri­or­i­tyin the re­cov­ery of dues if the re­alty firm in whichthey­havein­vested goes bust,” he added. Chan­gesin the code will also help mi­cro, smal­landmedi­u­menter­pris­esby al­low­ing their pro­mot­ers to sub­mit­their res­o­lu­tion planinin­sol­vency cases. Small and medium firms are key to In­dia’s jobs growth. Thecom­mit­tee also pro­posed­tomakeit­easier­to­ge­tres­o­lu­tion plans as well as rou­tine de­ci­sions ap­proved.

Ac­cord­ingly, it sug­gested that the cur­rent re­quire­mentof votes from 75% of cred­i­tors be re­laxed to 66% of fi­nan­cial cred­i­tors for crit­i­cal de­ci­sion­sand51% for rou­tine de­ci­sions. Crit­i­cal de­ci­sions have been de­fined as ap­point­ment or re­moval of res­o­lu­tion pro­fes­sion­als and ap­proval or re­jec­tion of res­o­lu­tion plans.

The cabi­net also ap­proved spend­ing Rs7,330 crore to im­prove mo­bile con­nec­tiv­ity in 96 districts in 10 states that have been af­fected by left- wing ex­trem­ism. It also ap­proved the waiver of around Rs1,400 crore pe­nal in­ter­est on loans taken by Paradip and Visakha­p­at­nam ports.

THE MOVE IS LIKELY TO POS­I­TIVELY IM­PACT THE CLAIMS OF HOME­BUY­ERS IN PEND­ING COURT CASES

MINT/FILE

The Great In­dian Mall Boom be­gan in­nocu­ously enough in the early 2000s

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