Mall developers focus on small cities to meet potential demand
India’s large mall developers companies are focusing on small towns, scouting for potential purchases. Developers like Future Group, Inorbit Malls (India) Pvt. Ltd and Infiniti Mall are looking to acquire malls in small cities to tap the potential there, while the top urban markets are close to being saturated. Inorbit, a division of Mumbai-based real estate developer K Raheja group, plans to invest Rs.1,500 crore for the development of new malls or in purchasing the existing malls in small cities.
Mr. Kishore Bhatija, managing director and chief executive of Inorbit Malls says that so many properties are coming to sale across the country, projects that are either stuck for money or finished projects not doing well. He also added that lot of people have got in to it but do not know how to take that forward.
Inorbit has six malls in the country in following cities Mumbai, Pune, Hyderabad, Bangalore and Vadodara and hopes to open 4 to 5 new malls in next 5 years.
As per the expert, major problem for mall developers in small cities is improper zoning, poor designing and the strata sale format, in which spaces in malls are to sold to investors to meet cash flow.
Mr. Ashutosh Limaye, head of research and real estate intelligence service at Jones Lang LaSalle India says that the big developers are experienced in handling large mall formats, they have maintained comfort with retailers, are backed by private equity funds and are not stressed for finances, so need not do strata sales.
Mr. Mukesh Kumar says that Mumbai market has become saturated with few opportunities. The places where opportunities currently lie are Bandra to Lower Parel belt or parts of South Mumbai.
Mr. Kumar also added that they were looking to acquire existing properties up for sale under development in small cities.
A consultant says that the Future group is interested in acquiring similar properties. The Future group in 2006 acquired Mumbai’s first mall Crossroads, now known as SOBO Central, from Ashok Piramal Group for Rs.350 crore.
Mr.Kishore Biyani says that our company is focusing on those lines.
According to Limaye, over 75% of the malls were located in big cities, and only 25% were located in small cities.
Mr. Limaye also mentioned that malls in cities like Mysore and Raipur were constructed by residential real estate companies who don’t follow the right rules and now struggling to fill the malls.
He also mentioned that lot of small cities like Raipur, Ujjain, Udaipur, Jabalpur, Mangalore and Ludhiana have witnessed an oversupply of malls and these days most of the malls are vacant as these cities. This is the reason which provides a good chance to large larger developers to buy these and save on the construction time.
Mr. Surjit Singh Rajpurohit believes that the small town strategy won’t be easy to apply. He also says that the developers are looking to buy the existing malls and it is difficult as most of these malls follow the old sold out model and for redevelopers to purchase that and then lease it out again. Another problem is of land. If an individual has land then it reduces the cost.
Source: The Live Mint
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