Real estate giant DLF will be investing nearly ₹2,000 crore to construct two new shopping malls in Gurugram and Goa, as it sees huge growth potential in organised retail with opening up of the economy after significant reduction in coronavirus infections.
Speaking to news agency PTI, Sriram Khattar, Managing Director, DLF Rental Business, sounded bullish on India’s organised retail sector, which was affected very badly in the past two years amid Covid-19.
He said the realty major is expanding its retail real estate portfolio, and will develop two new shopping malls – ‘Mall of India’ Gurgaon and four neighborhood shopping centres.
Currently, DLF has a retail footprint of 42 lakh square feet comprising eight properties, including malls and shopping centres, mainly across the Delhi-NCR region.
“We have started the construction of a premium mall in Goa of about 5.75 lakh square feet. It will be the best mall of Goa to the standards which our malls are,” Khattar told PTI.
About investment, Khattar said it would be around ₹300-350 crore over the next two years. “We are also in the advance stage of planning for our ‘Mall of India’ Gurgaon comprising 2.5 million (25 lakh) square feet area,” he said.
The construction is expected to start by the end of 2022.
“So the architects have started doing the designing. We hope to complete it over the next six months or so. Since it’s a very large mall, the planning takes more time,” Khattar added.
‘Mall of India’ Gurgaon’s project cost would be nearly Rs 1,500-1,600 crore, excluding land cost.
When asked how different this project would be from the two million square feet Mall of India-Noida, he added: “With each experience, we have tried to improve upon ourselves. Therefore, from our learning from Noida mall, this will be that much better.”
On viability of ‘Mall of India’ Gurgaon project considering the presence of Ambience Mall nearby, Khattar said the competition helps in growing the market.
“Given our credibility with the retailers and trust they repose on us, we do not see an issue in terms of getting the best brands in the country and the world to this mall,” he asserted.
That apart, Khattar said the firm has started a concept of high-street shopping centres to cater to the requirements of people living around.
“We have started construction of one in DLF-phase 5, Gurgaon, which we are calling Summit Plaza. We are likely to start one in Moti Nagar, Delhi near our DLF-Midtown project. We are also planning one or two more of these,” he said.
The high-street shopping centre in DLF phase-5, Gurugram will be of around 3.8 lakh square feet, while the one in Delhi of 2.2 lakh square feet.
Asked about the outlook for retail business particularly after the onslaught it faced during the past two years because of nationwide lockdown and local restrictions, Khattar said: “The pre-COVID levels are coming back very quickly. Gyms, cinemas and other entertainment formats have opened up completely.”
He noted that the organised retail in India is still unpenetrated.
“Given the economic growth that takes place, more and more people move from disorganised to organised retail shopping. We see a very bright future for organised retail and therefore malls as we go forward,” Khattar said.
He said the firm continuously focus on improving the shopping experience of people visiting its properties.
“If we continue to do that, we believe that the markets are pretty good for us.”
On the new trend, he said the international brands have performed well, in fact better than the pre-COVID levels.
When asked about the losses DLF suffered in its malls business in the last two years, Khattar said: “Instead of quantifying losses, one has to look at this emotionally.”
During the pandemic times, he said, the firm’s emphasis was never on the profit and loss or on rentals recovery.
“Our emphasis was to hold hands with our retailers, typically who have 1-10 stores and not having strong balance sheets, tell them that we stand by them during this difficult times.
“We believe that it was an investment well made. These retailers are now with us, and will contribute to be our retail partner as we grow our retail business,” Khattar said.
On plans to enter new cities for development of malls, Khattar said the company would explore such possibilities. The company is developing some value added retail component in its upcoming IT park DLF Downtown, Chennai.
Khattar informed that the retail portfolio contributes around 18 per cent to its total rental income and 12-13 per cent to its total annuity portfolio.
ssets in the next fiscal, Khattar said: “We are looking next fiscal year with cautious optimism.”
Still, he said, the rental income would grow in the next fiscal at a rate higher than the current industry average.
As many as 90-93% of the firm’s retail portfolio is under the DLF Cyber City Developers Ltd (DCCDL), a joint venture between DLF and Singapore sovereign wealth fund GIC.
DLF is India’s leading real estate developer. It has developed around 153 real estate projects and an area of approximately 331 million square feet.
The group has an annuity portfolio of over 35 million square feet, of which 33 million square feet is LEED Platinum certified by US Green Building Council. The annual rental income is around ₹3,500 crore.
Source : Live Mint