In one of the biggest deals in commercial real estate in Chennai, Shriram Properties is understood to have agreed to buy Marg Group?s mixed-use development project Marg Junction for close to R600 crore.
The parties were negotiating the deal since mid-2012, sources said. ?The term sheet is signed and the due diligence process will take about four to five months,? a person familiar with the development told FE.
Spread over 7.30 acre, Marg Junction Mall is billed to be Chennai?s largest integrated development project. The project is located at Karapakkam on the Old Mahabalipuram Road (OMR), an upcoming IT corridor in the southern suburbs of Chennai.
The first phase of the project will house a mall of 7.5 lakh sq ft having retail, multiplex, gaming and food court options, while the second phase is expected to house serviced residences, business centre, banquet hall and club cum wellness centre.
Sources said the soft launch of the mall is expected in June 2014. However, 65% of the space in the mall has already been booked and could touch full occupancy by the time of opening.
Marg and Shriram Properties did not respond to mails and repeated calls for seeking their responses. As the OMR is still developing, the development does not have a structured format at the moment, say property consultants. However, lease rentals in OMR are in the range of R30-35 per sq ft per month for anchor tenants with large space requirements, while vanilla stores, or smaller spaces, are in the range of R70-75 per sq ft per month.
OMR features among the emerging hotspots of India, says a recent report by Jones Lang LaSalle India. ?OMR is in nascent stages when it comes to retail developments, however, with increased residential settlements we foresee rapid retail development in this corridor,? the report said.
In terms of capital value growth, Jones Lang LaSalle said that properties along the first half of the OMR will continue to see healthy growth on the back of improving social and physical infrastructure.
Meanwhile, the second half of the OMR is expected to see relatively faster growth in capital values, given the government?s plan to extend the six-lane project from Siruseri to Mahabalipuram.
Chennai as a market too seems to be gaining prominence in the real estate landscape of India, as both domestic and foreign investors look out for safer investment destination and capital appreciation.
That realty market in southern India has been catching the fancy of investors is also visible from the increase in the number of transactions in the recent past. GIC, sovereign wealth fund from Singapore, is understood to be in advanced stages of discussions with ICICI Venture to buy out its 50% stake for around R275 crore in WaveRock, Hyderabad.