In a tepid market, real-estate developer Unitech is adopting a new strategy in its shopping malls: first lease to tenants before building the structure. To start with, the company plans to follow the strategy at its 147-acre property which houses the Great India Place, while a new Garden Galleria mall is scheduled to open during the current fiscal through March 2016.
“It’s safer,” Munish Baldev the head of retail at Unitech told FE. “There’s no sense for us to construct and wait”.
The move augurs well for both Unitech and its retail tenants at its shopping mall, who want to expand their stores. The retailers get a larger and exclusive space, as per their specifications and the real-estate developer gets higher revenue because of the long-leases they sign. The Gurgaon-based company gets about 5% of its revenue from retail operations, while the majority is still dominated by the residential apartments its builds and sells.
The strategy is a business necessity since most of the brands have already set up shops at Great India Place mall, and some more are setting up their outlets at the new Garden Galleria mall. Still, some of the existing retail companies want to expand into an exclusive and a large space, that gives them more brand visibility and higher sales.
International Recreation charges Rs 300 per square feet, or 18% as revenue-share from the retailers at its Noida property, as lease rent for the property that retailers take for their stores.
“Right now we want to do concept buildings,” Baldev said. “This is being done for brands with special needs in terms of store sizes and design. We already have all the existing retail brands covered in GIP (Great India Place) and 40% of those are repeating in Gardens Galleria.”
At its 147-acre property in Noida owned through a joint venture called International Recreation Parks and managed by Unitech, the company has constructed a built-to-suit store for Decathlon, a sports goods company. Decathlon, which initially had a 20,000 square feet space at the Great India Place mall expanded into its new building of about 42,000 square feet, within the same campus.
International Recreation is a joint venture between Unitech Holdings and International Amusement, a company owned by the promoter-family of Appu Ghar, India’s oldest amusement park.
“For the next expansion of 1,00,000 square feet of space, leasing will be done and then the constructions will be done, which is built-to-suit,” he said. The company plans to add about 30,000 square feet every year for the next three years.
Unitech has already signed couple of deals and some more are in the pipeline. It has partnered with Imagination Edutainment India for building an indoor theme destination for children spanning 96000 sq. ft. under brand name of Kidzania. Multiplex operator PVR has signed an agreement for setting up India’s biggest screen complex with 16-17 screens theatre.
Currently, Unitech earns Rs2200 crore from Great India Place alone, and with the new Garden Galleria being occupied, the revenue is expected to reach Rs 3200 crore.
Apart from its Noida property, Unitech also intends into built malls in about 10 cities and towns across the country, Baldev added.