Godrej Properties is the latest to venture into the popular mixed-use land segment with the company entering into partnership with the Taj Group of Hotels to build a 150-room luxury hotel at its Trees Project in Mumbai. These kind of projects, which are much in vogue these days, would include a hotel and retail segment in addition to a central residential piece. Apart from Godrej, Oberoi Realty, Brigade, Hubtown, DB Realty and Logix are some of the other companies that have recently announced mixed use projects. At times, these projects join hands with marquee hotel brands, for instance, the Oberoi Ritz Carlton partnership. Delhi-based, Logix also has the Hilton Group of Hotels as its partner.
Apart from Mumbai, Bengaluru also has a host of successful mixed used projects by leading local developers like Prestige Estates and the Embassy Group. “Mixed use developments can work, but location is of paramount importance,” said Amit Bhagat, CEO and managing director at the ASK Group. For example, a five star hotel in Vikhroli might work because there are no other hotels in the radius of 8-10 kilometers and the project is located bang on the eastern expressway, which is a critical connector, Bhagat explained. However, the same did not work for Phoenix Mills – St Regis struggled with its hotel in Lower Parel, with numbers improving only recently. According to one analyst, just like a mall, a hotel works on the premise of a catchment. Banking heavily on leisure travel and with a competing hotel within driving distance of a kilometer did not work for a hotel with more than 300 rooms.
When “Trees” launched back in November of 2015, Godrej sold about 350 apartments in one month, bucking the trend of slumping housing sales. In the next few months, it even raised its asking rate to `20,000 a sq ft from its launch price of `17,000 sq ft, according to channel checks. “When it ties up with Taj, it immediately raises the profile of the project and gives Godrej a leeway to hike rates,” said a market analyst who tracks the company. Because it is a large land parcel, Godrej must think of creating a social infrastructure around the project, else it will not be able to sell a project of that scale because people will not pay crores and still have to drive for six kilometers to eat out or watch a movie, the analyst added.
To be sure, Oberoi Realty pioneered the mixed use segment in a sense when it signed a deal with the Westin Group to build a hotel in its Goregaon project. Owing to its mega success, it is now replicating the idea for its Worli plot, partnering with Ritz-Carlton. Experts said a large project, in upcoming areas, need to ensure basic social infrastructure; options such as walk-to-work, basic entertainment spots, perhaps a school in order to attract sustained demand.
Oberoi’s Goregaon project, for instance, is more than 50 acres in size and has a school, a small and a commercial complex adjoining residential towers. Godrej Properties has acquired 35 acres at the moment from Godrej Industries but in the future, it has the potential to tap into more land as it is located within its parent company’s headquarter.