ADIA-backed Lake Shore India Advisory planning to build four malls in India

Abu Dhabi Investment Authority (ADIA)-backed Lake Shore India Advisory, co-promoted by retail property veteran Ashwin Puri, is looking to develop malls in Mumbai Metropolitan Region (MMR), Gurugram, Ahmedabad, and Hyderabad, said sources in the know.

Lake Shore has floated a fund wherein ADIA is the main investor. According to sources, the corpus of the fund is around $250 million.

“They have signed memorandums of understandings (MoU) to develop malls in Gurgaon (Gurugram), Ahmedabad and Hyderabad,” sources aid.

According to industry experts, Lake Shore will have to spend at least Rs 35 billion on the project. 

In Mumbai, the company has formed a joint venture (JV) with local developer Swastik Developers to build a mall in the Vasai area of MMR. Built on 2.4 acres, the project has a development potential of 370,000 sq ft, and will cost about Rs 3 billion, sources said.

For the Ahmedabad project, Lake Shore is joining hands with local real estate developers 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 had earlier signed a deal with Harinder Singh of Reach Promoters to develop a 450,000 sq ft mall. Of late, the fund has signed another memorandum of understanding (MoU) with Reach to take it to 1 million sq ft, said sources. The plan is to build the mall in two phases. 

Ashwin Puri could not be contacted for comments.

Lake Shore plans to build the mall in Vasai in 12 months, the Phase-I of the Gurugram mall in 12 months, and those in Ahmedabad and Hyderabad in four years.

“They have picked good locations and have a good team. They should do well given that they are running the business professionally,” said Rituraj Verma, partner at Nisus Finance Services.

Verma said given the shortage in the number of malls, the company should generate decent returns on their investments. He said a developer had to spend between Rs 6,000 and Rs 10,000 a sq ft to build a mall.

While US-based private equity and financial services firm Blackstone and Singapore's wealth fund GIC have mostly bought leased malls, Lake Shore is developing malls on its own, sources said. Blackstone owns about nine malls in India, with a total space of over 5 million sq ft. It has malls in Mumbai, Amritsar, Chandigarh, Ahmedabad, Pune, among other places.

GIC owns stakes in R City Mall in Mumbai and Viviana Mall in Thane. 

Another investor Canada Pension Plan Investment Board or CPPIB has signed a JV with Phoenix Mills to develop malls in the country. Investors are betting on the better yields in malls and demand for quality mall spaces. 

An office building offers yield of 8-9 per cent, while a good mall offers 9 -10 per cent, Balaji Rao, managing partner for real estate Axis Asset Management company, told Business Standard earlier.

Rao added that investors were chasing malls that were well-formatted and -managed. "Investors are also betting on the shift of unorganised to organised retail in the country," he said.

Net leasing of retail space in shopping malls rose by 77 per cent during the first half of 2018 at 1.94 million sq ft in the top seven cities on rising demand from global and domestic brands, according to property consultant JLL India. Net absorption of retail space stood at 1.09 million sq ft in the January-June period of 2017.

On the new mall space, JLL said new completions saw a decline of about 25 per cent to 2.1 million sq ft in the first half of 2018 over 2.8 million sq ft in the same period last year. 

According to JLL, retail sector is estimated to grow to Rs 1 trillion by 2020, at a compound annual growth rate of approximately 12-15 per cent.

On the cards
 

• Lake Shore signs a JV with Swastik Developers to develop a mall in the Vasai area of MMR
• Vasai land has a development potential of 370,000 sq ft. The project cost is about Rs 3 billion
• In Ahmedabad, the firm is in a JV with Ganesh Housing, which owns 2.4 acres in Ahmedabad
• It has signed an MoU with the Reach to build a 1- million sq ft mall in Gurugram
• Lake Shore plans to build the mall in Vasai in 12 months, the Phase-I of the Gurugram mall in 12 months