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Indian Realty Snapshots: A Time Line

A compilation of Articles by Trammell Crow Meghraj (2001-2005)

Trammell Crow Meghraj Property Consultants Pvt. Ltd.

An ISO 9001:2000 certified company (Formerly Chesterton Meghraj Property Consultants Pvt. Ltd.)

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March 2006

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List of Contents 1. INVESTING IN REAL ESTATE .......................................................................................................................... 3 2. INDIAN IT REALTY- A SNAPSHOT................................................................................................................... 7 3. INTERNATIONAL PLAYERS: THEIR INVESTMENT IN INDIAN REAL ESTATE............................................. 11 4. KERALA: OPPORTUNITIES IT OFFERS AS A RETAIL DESTINATION.......................................................... 15 5. MUMBAI MILL DISTRICT: REAL ESTATE REGENERATION.......................................................................... 22 6. KOLKATA: EMERGING RETAIL OPPORTUNITIES ........................................................................................ 26 7. DELHI NEEDS REFORM IN URBAN DEVELOPMENT NOT GUIDELINES..................................................... 30 8. IT, ITES IMPACT ON REAL ESTATE IN BANGALORE................................................................................... 33 9. SPECIAL REPORT–‘NEHRU PLACE REVITALIZATION’ – Concluding Part 2 ................................................ 37 10. RETAIL SPACE DEVELOPMENT IN INDIA..................................................................................................... 41 11. BUDGET 2003-04: WHAT IT HAS TO OFFER TO THE REAL ESTATE SECTOR……. .................................. 49 12. SPECIAL REPORT–‘NEHRU PLACE A CASE FOR REVITALIZATION – Part 1 ............................................. 51 13. SPECIAL REPORT 1 – ‘EVOLUTION OF THE INDIAN MALL – A COMPARISON WITH MALLS IN DUBAI ... 55 14. SPECIAL REPORT 2 – ‘REGENERATION OF WEALTH FROM LOCKED URBAN ASSETS - A REAL ESTATE PERSPECTIVE........................................................................................................................................................... 59 15. SPECIAL REPORT – ‘MUMBAI REAL ESTATE – BOOM OR BUST?!’ ........................................................... 63 16. SPECIAL REPORT – ‘THE PREVAILING RETAIL SCENARIO IN CHENNAI’S REAL ESTATE MARKET’ ...... 66 17. SPENCER PLAZA, A RETAILER’S PARADISE............................................................................................... 69 18. ROLE OF REAL ESTATE IN FINANCING INFRASTRUCTURE PROJECTS .................................................. 71 19. GUEST FEATURE – ‘Ludhiana – The Next Retail Boomtown?’ ....................................................................... 74 20. GUEST FEATURE – ‘THE CHANGING FACE OF RETAIL PROPERTY TRENDS IN JAIPUR’ ....................... 78 21. GUEST FEATURE – ‘INNER CITY REDEVELOPMENT: URBAN VILLAGES OF DELHI’................................ 82 22. GUEST FEATURE – ‘INNER CITY REDEVELOPMENT.................................................................................. 85 23. RETAILING - TOWING INTERNATIONAL NORMS OR LOCAL REALITIES?.................................................. 88

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1. INVESTING IN REAL ESTATE Realty Review- October - December, 2005 – edition

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Investing in real estate

Real estate investment market in India has matured since the year 2000, with more and more large investors investing in real estate rather than bonds and other funds. Return or income from real estate is much higher than other investment options in absolute terms. If we combine the return with the appreciation rate, real estate provides almost double that of many other investments options. Currently we are passing through an era of consolidation and rationalization in most of the micro real estate markets in India. Real estate sector, along with its allied sectors, contributes to around 30% of India’s GDP. This figure is set to grow exceedingly in the coming years. There are many reasons for the phenomenal growth of this sector. For one, the upward curve of Indian economic growth has given the biggest boost to this sector.

In the major and upcoming cities, certain areas come up as the viable locations for investment in real estate in India this year. This report is based on regular field research and analysis done by Trammell Crow Meghraj’s real estate professionals.

Bangalore

The real estate scenario in Bangalore which had started in the fast gear in the last decade has started booming now. The growth has been fuelled by the knowledge industries mainly by the IT sector. The growth in commercial developments has also led to a boom in the housing sector and many large residential projects have been launched within and even outside the city green belt zone.

Developers outside Bangalore like DLF, Unitech and even developers based overseas are planning investments into the city. With the FDI relaxation of the 100 acre norm, more overseas developers are likely to enter the fray.

Upcoming areas

Residential: Whitefield, Old Madras Road, Outer Ring Road, Hebbal Commercial: Whitefield, Koramangala, Indiranagar and Airport Road in the Eastern fringes, Jayanagar in the South and Malleshwaram in the Northern periphery of the city, Inner Ring Road and Outer Ring Road, Hosur, Bannerghatta and Sarjapur Road areas

Hyderabad

The city of Hyderabad is giving competition to Bangalore as the next ITITES sector. It has made rapid st rides in the bio-tech and pharma sector as well.With better infrastructure already in place and many MNC majors now already operating , the city is poised to grow economically as well as spatially. The city is not constrained to grow in any specific direction and projects are cropping up at various places. This is also the city which has seen many overseas developers with township projects in the joint venture mode with Government agencies�

Upcoming areas

Residential: Banjara Hills, Jubilee Hills and Madhapur, Medchal, Alwal, Kushaiguda and Mehdipatnam.

Commercial: Raidurg, Manikonda and Vattinagulpally, Hi-tech City and Gachibowli.

Kolkata

Kolkata is seeing a resurgence in its economic outlook after years of

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stagnation and this is primarily due to knowledge based industries. With the Government initiative in promoting this sector, many IT majors like Infosys and Wipro have taken a position in the city. Along with them many developers outside Kolkata like like RMZ and Salarpuria from Bangalore and Unitech and DLF from Delhi have made an entry with IT led developments particularly in Rajarhat.

The city has seen investment by the Salim group of Indonesia in the West Howrah township. Kolkata traditionally has been the engine of growth for the Eastern India and thus has a huge catchment of influence in the East. The future development of the city would be governed by sustaining the present economic initiative in the knowledge sector as well as the liberal land policies of the local Government.

Upcoming areas

Residential: Salt Lake, Rajarhat, Howrah, Batanagar, Pailan Joka and Baruipur

Commercial: Rajarhat, Salt Lake and Park Street

Mumbai

The real estate market of the financial capital of the country is seeing heightened activity in 2005. Over 600 acres of mill land in Mumbai, which closed down after the 1980s lockouts, has vast scope for re-development and therefore is a hot deal for the real estate developers. The 265 acres of the 25 NTC mills are valued at a high price, which ranges between Rs. 30,000 to Rs. 70,000 per square metre. However, the recent high court judgement on NTC mills will delay the process for the sale of NTC mills in Mumbai. Yet, land from the remaining mills, including the private ones, will be released in the next few years. However this won’t bring in a situation of an oversupply as the demand is still expected to outstrip the supply. Mumbai is catching up with Gurgaon and Bangalore which were favorite commercial real estate destinations till now.

Upcoming areas:

Residential: Shivaji Park (Dadar), Prabhadevi, Mulund, western suburbs, like Malad, and central suburbs such as Vikhroli and Powai.

Commercial: Bandra Kurla Complex, Lower Parel, Powai, Goregaon, Malad

Delhi

Real estate in Delhi and the surrounding National Capital Region (NCR) seems to be on a non-abating upward curve. Apart from the 50 plus malls that are coming up in the region, and the hectic activity in commercial and residential realty, the NCR will see new townships being added to its already impressive list of developments. Since NRIs specially look out for premium property like penthouses and apartments equipped with all luxuries and amenities, the real estate sector in the capital has also seen a huge demand from the NRIs. Continuing supply of residential real estate, together with vigorous activity in the retail and commercial property segments, accompanied by infrastructure developments including the metro rail network, are likely to keep the real estate sector buzzing with activity in the near future.

Upcoming areas

Residential: Pitambara, Rohini, Gurgaon, Ghaziabad, Noida, Indirapuram, Vaishali

Commercial: Gurgaon, Noida, Greater Noida

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Chennai

The year has been good for Chennai as residential property prices have appreciated nearly 10–15 per cent across the realty market in Chennai. Even the commercial sector boomed as many IT companies like EDS, IBM, 24/7 and Philips showed interest in office space here. The year also was large developers like DLF, Unitech, Runwal, RMZ entering the market. The city has gained from the growth phase of Indian IT companies and the option exercised by many multinational financial institutions to base their BPO facilities in Chennai. With these sectors expected to continue expansions over the next two years, a similar fate for real estate can be predicted.

Upcoming areas

Residential: New Mahabalipuram road, Velachery, Tambaram

Commercial: Anna Salai, Dr. Radhakrishna Salai and Nungambakkam High Road

Pune

Pune has been a preferred real estate destination for quite some time, courtesy the IT and ITeS boom. With developments like Hinjewadi IT Park, Talawade IT Park, and a number of other government and private IT parks, Pune market has reached to the standards of giving competition to cities like Hyderabad, Chennai, and Bangalore. Now the boom is spreading to the other real estate segments too. There are a number of residential projects are in various stages of execution and completion across the city. With land freely available, development in Pune is happening in a phased and planned manner. Most areas have a great potential for future expansion, and with the city attracting the attention of more and more IT companies the going will only get better.

Upcoming areas

Residential: Kondhwa, Lullanagar, Fatima Nagar, Wanowrie, Baner

Commercial: Kalyani Nagar, Wakad, Nagar Road, Senapati Bapat Marg, Hinjewadi IT Park, Talawade IT Park, Aundh, Pimpri - Chinchwad

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2. INDIAN IT REALTY- A SNAPSHOT Realty Review-September, 2005 – edition

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IT-ITeS Industry – India

In recent past the IT-ITeS industry has shown tremendous growth. According to a research report by NASSCOM, the Indian software and services exports sector clocked revenues of US$ 17.2 billion registering a growth of 34.5 percent in the year 2004-05. The industry employee base crossed the one million mark with indirect employment attributed to IT-ITeS standing at 2.5 million.

While traditional IT services grew at a steady rate, it was the BPO sector that really stole the show with a phenomenal 49 percent growth. While the large companies continued to focus on improving the revenue mix and increasing realizations, utilization, the mid-sized players emphasized on domain strengths and process management skills and demonstrated the values of focused solution providers. BPO firms balanced voice and non-voice business portfolios to diversify revenue and raise seat utilization. It is estimated that the Indian software and services exports industry will register strong growth of around 30-32% in the financial year 2005-06.

India’s Leading Edge

The quality manpower

India has one of the largest pools of skilled English -speaking professionals. Indian programmers are known for their strong technical skills and their eagerness to accommodate clients. In some cases, clients outsource work to get access to more specialized engineering talent, particularly in the area of telecommunications. As per the NASSCOM survey, every year, out of 2.4 million students enrolled in graduate and post-graduate courses only 2.5- 3% of these students find jobs in other fields or pursue further studies abroad, the rest opt for employment in the IT industry.

Government Policies

The Indian Government recognizes that Information Technology will influence economic development extensively in the future. IT is a part of Government's national agenda and all policies are driven to bring maximum benefit to this industry. Some of the important points of Government’s IT policies in India include liberalization and deregulation aimed at supporting growth. With respect to real estate, the Government has permitted more FSI/FAR than usually permitted for the development of IT-Parks in most of the emerging IT cities in India.

More Economical Real Estate

In comparison to other leading and developed global cities, the Indian cities offer more economical real estate for the IT - ITeS sector. The foreign companies usually consider about 1 US dollar per month per sq ft as the real estate cost for the setting up the IT establishments. However, this scenario of 1 US$ per month per sq ft is changing to a great extent, particularly in metro cities and is one of the reasons for IT establishments shifting their base to tier II and tier III towns, where you have an access to a similar pool of manpower but with a lower real estate as well as per employee cost.

Existing and emerging IT centers in India

The buoyancy of IT -ITeS sector has triggered off frenzied demand for office space with the developers putting up more supply. Most of the office spaces in state-of-art IT-Parks are promptly leased by both domestic and international firms. While traditional ‘Infotech cities’ – Bangalore, Mumbai and Delhi (National Capital Region) are leading the race

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adding millions of square feet of quality office space, others notably Pune, Hyderabad, Chennai, Kolkata and even Thiruvananthpuram and Chandigarh are witnessing brisk construction activity.

Groups that have shown interest in developing IT real estate projects in India include High Point Rendel of the UK, Edaw of the US, Japan’s Kikken Sekkel, Dubai’s Emaar group, Lee Kim Tah Holdings of Singapore, and Cesma International also of Singapore. Singapore based developer, Ascendas has already developed over 3 million sq ft of IT Parks in Southern India and wishes to expand fast in other towns as well.

Other than the private developers’ initiatives, major initiatives have been taken by state-run organizations. In Maharashtra, Government owned MIDC has promoted many IT parks across the state. It has developed country’s premiere ‘knowledge corridor’ spanning across two cities of Mumbai and Pune. Many other State Governments are also pushing ahead, promoting IT parks, offering incentives and wooing leading companies. Kerala and West Bengal are notable among those states.

From a property market standpoint, typically the cities that are witnessing major influx and expansion of ITeS firms have been ranked as Bangalore, Mumbai, Gurgaon (NCR), Hyderabad, Chennai and Pune. However, even as these cities are attracting IT-ITeS investments and creating employments for thousands of citizens, escalating real estate costs, paucity of skilled IT professionals and overstressed physical infrastructure are creating challenges for IT-ITeS organizations that have set up operations in these cities.

Emergence of Tier II and Tier III Cities

Increasingly, it is being felt that other Indian satellite towns and tier II and tier III cities need to be developed for the IT -ITeS sector, so that some of the pressure can be taken off the country’s key silicon cities. A number of these smaller towns offer advantages in terms of cheaper real estate, access to relevantly skilled manpower and gradually improving telecom and physical infrastructure.

The last few months have seen IT-ITeS majors such as IBM, Dell, Cognizant, MphasiS, Satyam unveiling plans for smaller cities like Coimbatore, Mangalore, Chandigarh and Vizag. Wipro and TCS have also acquired land at Vishakapatnam; Honeywell is in process of expanding its Madurai operations. In Andhra Pradesh, Satyam Computer Services started work at its new 50-acre centre in Vishakapatnam. Satyam Computer Services is also establishing a technology centre at Thotlakonda near this port town on seven acr es. In Karnataka, MphasiS recently set up a BPO unit in Mangalore with an initial outlay of INR 700 million. Similar is the case with Kerala, Thiruvananthpuram and Kochi. Wipro, for example has started operations in Kochi at the beginning of this year, while TCS already has a training centre in Thiruvananthpuram.

In Northern India, Chandigarh possesses the advantage of a small city in terms of travel time and availability of real estate and power. As per the estimates, five million sq ft of IT space is under construction in this city. Infosys is also in the process of planning its software development center in Chandigarh. Jaipur retains the advantage of a small city, with lower travel time, real estate and power availability. Its proximity to Gurgaon is making companies like GE consider it as an attractive second option to their Gurgaon operations. Similar is the case with another emerging town of Maharashtra, Nagpur. Real estate rentals are comparatively cheaper along with highly skilled student population over here.

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Case of Noida

As per the Competitiveness Report by neoIT1, Noida is the seventh most competitive city for IT –ITeS development among 27 Indian cities. Although Noida, lags behind its regional competitor Gurgaon (ranked first in the survey, followed by Bangalore), it has competitive advantages (such as cheaper real estate, accommodation cost and better public transport) over its predecessor.

New Supply of IT-Park projects in Noida

Project Built-up area (s ft)

Rentals (INR/ month) Confirmed Tenants

Logix Park 150,000 12,000 per seat for incubator space

Patni Computers Ltd.; Integra Data Services Pvt. Ltd.

Logix Technopark

500,000 INR 18 per sft for bare shell

Infogain

Express Tower 250,000 INR 30 – 35 per sft for bare shell

Motorola

Other than the above-mentioned IT Parks, there are large built-to-suit campuses accommodating Indian IT majors like HCL, CSC, Adobe and TCS. Built up areas in such campuses are ranging between 25,000 to 80,000 sq ft in single as well as multiple buildings in Noida. Additionally bare shell structures are in good supply at various locations in Noida city, especially in prime areas. Annual supply of IT spaces in Noida is about 0.78 million sq ft.

Now Noida has become one of the established IT hubs of India and is growing at a fast pace. The growth of Noida as IT destination indicates the potential of satellite towns, which provide cheaper real estate, quality manpower and proximity to a developed hub. The case of Noida reflects that. The planned infrastructure, amenities and policy support are the key components in development of an IT city.

1 neoIT has developed the Offshore City Competitiveness Index (OCC) to help in comparing different cities across the globe. The OCC Index is a measure of the relative competitiveness of each city as a preferred destination for IT or BPOs. The index presents a current and future look at cities. Using a balanced interplay of critical due diligence elements of technical infrastructure, people, finance and catalysts, the index is an excellent aid to help decision makers zero-In on a particular city as they move operations overseas

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3. INTERNATIONAL PLAYERS: THEIR INVESTMENT IN INDIAN REAL ESTATE

Realty Review- July - September, 2004 – edition

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International Players:Their Investment in Indian Real Estate

The good news is that global developers are here in India developing ‘integrated townships’ similar to those in the West World. The bad news however is that they are only a few as of now. Foreign investment in integrated residential township sector is on a high growth path after, Indian Government allowed up to 100% FDI in real estate.

FDI policy in the real estate sector has the following main features:

• 100 per cent FDI by foreign companies (registered in India under Companies Act of 1956) interested in developing integrated townships is permitted.

• The minimum area to be developed by such a company should be 100 acres for which norms and standards are to be followed as per local bylaws / rules. In the absence of such bylaws / rules, a minimum of two thousand dwelling units for about ten thousand population will need to be developed by the investor.

• The minimum capitalization shall be USD 10 million for a wholly owned subsidiary and USD 5 million for joint ventures with Indian partners, with funds being brought upfront.

• A minimum lock-in period of three years from completion of minimum capitalization shall apply before repatriation of original investment is permitted.

• A minimum of 50% of the integrated project development must be completed within a period of five years from the date of possession of the first piece of land. However, if the investor intends to exit earlier due to reasons beyond his control, it shall be decided by FIPB on a case-to-case basis.

The first approved foreign direct investment, was USD160mn residential project to be developed in Gurgaon by a joint venture company between Delhi-based Feedback Ventures and a consortium of two Malaysian construction companies, Kontur Bintang and Westport which didn’t materialize at the end. Since the Government of India had allowed 100 per cent FDI for developing ‘integrated townships’ in the first quarter of 2002, more than 10 other proposals came up for approval and this is despite the stringent clause of a minimum area of 100 acres of development. Out of these, four major projects amounting to USD 700 mn, have already started ground breaking works

From the research study, it is estimated that the urban housing sector in India will require investments worth USD 20- USD 24 billion over the next five-year period.

Some of the major planned investments in India are mentioned here and a few of them have got FIPB approval:

• Dubai-based Emaar Group invested USD100 mn in a township project in Hyderabad which includes a hotel and a golf course . Tendering will soon begin for this two-phase project which will also include an International Convention Centre with a capacity of over 4,000 delegates and a 300-room Hotel alongside. The project will have 600 housing units which will include both villas and apartments. A Scottish firm RNJM has put up the concept drawings for the convention centre and the project is getting under way in coordination with an Indian architectural firm.

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• Jakarta-based Salim Group is to invest over USD 100 mn in 309 acre township project in Kolkata. This INR 500-mn project will be developed as a joint venture between Salim Group and Kolkata Municipal Development Authority

• High Point Rendel of UK, US-Based Edaw Ltd and Kikken Sekkel of Tokyo teamed up to work on a township development project in Jharkhand.

• Canada-based Royal Indian Raj International Corporation (RIRIC) is coming up with the USD 791mn worth Royal Garden City, a fully integrated township development in Bangalore. The total development will include 35,000 residential units with approximately USD2.9 billion investment, and is scheduled to be completed by 2015 in various phases. The development will be mix of residential, commercial, retail and entertainment and will be spread over 20 sq km. This is the highest FDI investment till date.

• CESMA International Pvt. Ltd, a subsidiary of the Singapore government's housing agency, along with AP government is promoting a township development in Hyderabad. The township consists of about 2,080 flats with clubs, recreation spots, swimming pools, schools and commercial centers besides other entertainment facilities. The project is built on a 60 acre land scheduled to be completed by end of 2004.

• Lee Kim Tah Holdings (a Singapore based company) with an investment of USD115mn is developing 100 acre mega township development along with commercial complex and related social infrastructure on Old Mahabalipuram Road. It is being developed in consortium with an Indian partner BP Ventures.

• AP Housing Board has approved development of 50 acre township in Vijaywada. The Singapore-based Cesma International will construct houses, apartment blocks here.

• Malaysian based developer IJM is developing township on an area of 35 acres of land in Hyderabad near Hi-tech City. The project is a JV between Andhra Pradesh Housing Board (APHB) and IJM (India) Infrastructure Ltd, which was short listed and selected after invitation of EOIs by APHB. In the agreement between IJM and APHB, the housing board will get additional fixed assured profits of INR 2,200 per sq. yd. irrespective of the cost price, in addition to the land cost. Total development is of approximately 2000 dwelling units.

• IJM’s 500-acre township (Investment: USD 350 mn), SAS Nagar, at Mohali near Chandigarh, is also a joint venture--with Punjab Urban Development Authority (PUDA). The project comprises of two units of 250 acre each and will have luxury apartments.

• Ho-Hup Construction Company Berhad is coming up with 125 acre FDI development at Shamshabad in Hyderabad with APHB on a revenue sharing basis. This project will be mix of bungalows, villas and apartments with 2000 plus dwelling units. The project is in planning stage and clearances are in process.

• Singapore’s another construction major, SembCorp Engineers and Constructors Pte Ltd, is also there working on eight projects in Mumbai, Pune and Bangalore. The company is looking for township and infrastructure projects in West Bengal, where it has tied up with Pragati Growth and Development Limited, Surbana and Public Works Department of West Bengal for the redevelopment of Curzon Park into a shopping cum entertainment destination with an investment of USD 50 mn.

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• Universal Success Enterprise Limited of Indonesia has signed a memorandum with Delhi based developer Unitech Ltd for developing a Rs 700-crore information technology park and housing project in Rajarhat on the outskirt of Kolkata. The project will be developed in association with the state government. West Bengal government is looking at this project as an example for future projects that are to be undertaken by foreign enterprises in the state.

• Gulf Oil Corporation, a Hinduja Group outfit, has signed an agreement with Abhishek Developers, a subsidiary of Bangalore based Mantri Group, to undertake redevelopment of 7.18 acres of Gulf Oil’s prime space (the company’s erstwhile research and development centre IDL Nitro Nobel Research Institute) in the Malleswaram area in Bangalore. The property will be redeveloped as high-end residential complex in three years from now.

• Singapore's fifth-biggest property group, Keppel Land Ltd, made its first foray into India after buying land in India's software capital - Bangalore, for INR 609 million (USD13 million). Keppel Land, which is partnering Puravankara Projects Ltd, developing first phase of the condominium project, located in area popular for high-tech campuses, would be launched in early 2006. Keppel Land, 54-per cent owned by Government-linked conglomerate Keppel Corp Ltd, holds a 51-per cent stake, to build at least 2,000 apartments on the 9.7-hectare (23.9 acre) freehold land over five years.

• Singapore based Evan Lim & Co. Pte Ltd are associated with a township development project in Visakhapatnam, Andhra Pradesh. The project envisages construction on 43 hectares of land and will consist of 2,000 dwelling units including primary school, a hospital and community hall.

Having taken an overview of these developments now, if majority of them come up successfully, it will show a positive sign for Indian real estate sector.

One of the major constraints restricting FDI in Indian real estate market is high cost of land. According to a study by Pricewaterhouse Coopers titled ‘Indian Real Estate-A Radical Shift’, if the ratio of land cost per sq mt to per capita GDP in 1999 for New Delhi is considered as the index at 100, the rate would be 2 in Kuala Lumpur, 6 in Sydney, 7 in Bangkok, 9 in Tokyo, 12 in Singapore, 13 in Jakarta and Seoul, 22 in Taipai, 52 in Bangalore, and 115 in Mumbai.

Over half of FDI inflows in China are in real estate sector compared to minimal in India. India needs to further reform its FDI norms and further relaxation is required to this stringent policy. China attracted seven times more FDI than India in 2002, 3.2 per cent of its GDP compared with 1.1 per cent for India.

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4. KERALA: OPPORTUNITIES IT OFFERS AS A RETAIL DESTINATION

Realty Review- April - June, 2004 – edition

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KERALA: OPPORTUNITIES IT OFFERS AS A RETAIL DESTINATION

Introduction

India has been called a nation of shopkeepers. This epithet has its roots in the huge number of retail enterprises in India, which totaled over 12 million in 2003. With 5000-year-old culture, 12 million retail outlets, more stores than rest of world put together and there is hardly any product, which is not available within the country, our retail markets appears predominantly traditional. India's retail sector is relatively backward not only by the standards of industrialised countries but also in comparison with several other emerging markets in Asia and elsewhere. In such scenario any emerging trend in retail in the country is encouraging and Kerala is one State which is under process of transforming its retail markets from traditional Bazaars to modern malls.

Kerala is among the smallest States of India and is an educationally advanced State with the highest rate of literacy (100%) among all Indian States. The main economy of the State lies in agriculture and tourism. The State is ranked 3rd best for the investment among 18 States selected by CII for the study. Here the retail markets are dominated by Jewelers and traditional apparels like Sarees etc. Large NRI base and exposure to retail markets in Dubai is creating brand awareness among the locals.

Most of the cities of Kerala have large NRI base, with high spending capacity of the people, which supports contemporary developments in the state. The residential, commercial and retail markets have been quite active in the recent times with a lot of NRI money floating in the region and an increased tourism activity. Thus, the state offers wonderful potential to the prospective national and international investors.

Population Growth Dynamics

Population growth and economic base of any city directly influences the trends in retail. The cities of Kerala are showing high growth rate of population because of natural growth as well as the in migration of people for better education, job opportunities, tourism and health facilities.

The capital city, Thiruvananthapuram shows a high decadal growth rate of 28.25% during 1991 – 2001. The city is now having a population base of 729,938. Presently Kochi has total population of 564,000 but is increasing due to enhanced employment opportunities. If we add up to the floating population of 750,000, it is the only million plus city of Kerala.

It is ironic that the biggest exporter of manpower in healthcare, Kerala is unable to transform its achievements in healthcare and literacy to corresponding economic growth. Besides the development of high quality physical infrastructure, such as roads, airports, ports, communication systems and so on, the power sector in the State leaves a lot to be desired.

NRI Influence and Changing Trends

Kerala always fascinates large number of Keralaites living outside India. These NRIs always intend to invest in Kerala, particularly in real estate sector in cities like Cochin and Thiruvananthapuram. The large base of NRI’s has motivated the developers to invest in luxury housing in and around Kochi (Ernakulam), Tiruvanathapuram etc. in the form of independent villas and high-end residential facilities. The high spending power of these communities has also started reflecting on the shopping trends.

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Handicrafts Shops in Kerala

Slowly the shoppers are changing their attitude from buying unbranded to branded products showing the increased brand awareness among people. This is a positive sign for the development of organized shopping centers like malls in the cities of Kerala. Kochi, Thiruvananthapuram etc. have special commercial significance being the most developed destinations in Kerala. With international Airports, IT developments and internationally acclaimed tourist destinations and even SEZ, these cities have greater role to play as economic center of the state as well as in the southern region of the country. The state is witnessing an increase in the interest of the investors especially the NRI population of the region. The Keralian cities, which are known for their consumption of gold and ranking among three largest gold consuming cities of India, are also emerging as a retail destination in south.

In today’s context, the trend of retail in India translates to the modern way of shopping and entertainment in contemporary complexes – the mall. As far as Kerala is concerned, till date, this state has not tasted the flavour of mall but many projects are on the anvil. The state is lacking in organized retail developments. The great affinity towards the indigenous products like sarees, jewelry etc. by the local inhabitants is one of the barriers for the set up of international branded retail developments. However, people are well aware of the international retail brands.

Retail Trends in Kerala

In the state of Kerala, the organized retail business in all the cities including Cochin which is known as commercial capital of the State, is dominated by jewelry and unbranded apparel (mainly traditional Saree) shops, while it lacks in organized retail activity in terms of branded goods.

In Thiruvananthapuram, the capital city of the state, the main retail activity is concentrated around East Fort, which offers two major commercial complexes viz. Attucal and Karimpanal which offers retail spaces ranging between 2,000 to 5,000 sq.ft. for large format shops and approx.150 – 250 sq.ft. for small format shops. These complexes offer retail spaces at monthly rentals of INR 35-40 per sq.ft. on lower and upper ground levels. On upper floors, office spaces are available at monthly rentals of INR 20-25 per sq.ft. The M.G. road offers showroom spaces for branded products in the form of lower ground and ground floors with upper floors as office spaces. Shopping complexes located in the heart of the city, such as CSC shopping center, offers retail spaces admeasuring approx. 1,500 sq.ft. each on 3 floors, at monthly rentals of INR 10 per sq.ft. with advance security deposit at the rate of 1,000 per sq. ft.

Retail rental values – Thiruvanthapuram region

Sl.No.

Location Name of Complex

Type of Retail

Ave. Size (sq.ft.)

Name of the retailer Retail Rent (inclusive of security deposit) INR/sq.ft/month

1 East Fort (shopping complex)

Attucal, Karimpanal

Mixed retail

150 –250 (small format), 2000 – 5000

Chemmanur Opticals, Alapatt Silks, Alapatt Jwellery,

35 – 45

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The city radically lacks in retail development, especially in terms of organized retail. Although, there are some efforts that have been made to introduce the idea of a shopping mall in the city but those are only shopping complexes. One such example is Catholic Shopping Centre (CSC) located near M.G.Road on one of its side roads came into existence 5 years ago to offer the ambience of a mall at smaller scale with the concept of brands under one roof. These commercial complexes have no zoning and theme – they cannot compete with any planned Mall and cannot be set an example for any proposed Mall in Thiruvananthapuram.

As far as Cochin Region is concerned, it offers wonderful potential to the prospective national and international investors with the tourist foot fall increased drastically in the last one year and with the focus of NRI’s to invest in Cochin. The Ernakulam main land is well connected with N.H. 47 connecting the city to Chennai and Bangalore. Also a coastal highway N.H. 17 is under construction, which will link Cochin directly to Parur and beyond. Cochin International Airport has triggered the development with number of tourists and on-bound passengers routing their trips from here. It is also the first International Airport developed by public-private partnership. Within three years the airport has over taken Calcutta and Trivendrum airport in terms of total traffic. Also the government of Kerala is promoting

(large format)

2 East Fort (individual shop)

Individual Shops

High Street retail

Alluka’s, Alapatt’s, Ramachandran Textiles

40 – 45

3 MG Road New retail spaces

Raymond shop, Parthas, Pavithra’s, Kanya Group, Quilon Electronics, Ayyappa’s, Lens & Frames, Wills Lifestyle, Luis Phillip, Titan Watches, Food World etc

20 – 25

4 Side Road of MG Road

Catholic Shopping Centre, City Heights,

New retail spaces

1000 - 1500 Sports Wagon and Shalome Opticals Ayappa’s, Bhima dimond etc.

15 - 20

5 Vallyambalam junctioin, Bakery junction, Vazuthacad junction

Office cum retail

2000 – 5000 Hot Breads, HSBC, HDFC, Airlines Offices, Natesan's Antiquarts,

25 – 30

6 Kesavapuram Kedaram Office cum retail

150 – 500 Kinaavu Fashion Jewelers, Sweet Mahal, Expressions – Hallmark Gallery, VIP suitcases and Radha’s ready wear.

15 – 25

M.G.Road Cochin

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Cochin as a business and IT destination with Cochin SEZ and Cochin Infopark (software park) in the pipeline

The retail market of Cochin is the most developed in Kerala. Previous to M.G. Road, Broadway was the high street of Kochi, with series of small format shops. The rentals at M.G. Road range anywhere between INR 40-60/- per sq. ft. per month, whereas other areas like Shanmugam Road and Broadway etc. have rates between INR 30-50 /- per sq.ft.

Retail rental values - Cochin Sl. No.

Location Name of Complex Type of Retail

Ave. Size (sq. ft.)

Retailers present Retail Rent (INR/sq. ft/month)

1 M.G.Road Allapat, Alluka, Bhima, Jayalaxmi, Seemati

Jewelry, Saree

5000 – 15000 Local Big Retailor Own Building

2 M.G.Road Individual Shops Branded 1000 - 1500 Wills Lifestyle, Indigo Nation, Levise, Nike, Crocodile, Verkey’s Backery, Phillips, Woodlands, Music World, Boots, Lens & Frames, Titan, Vimal Suiting etc.

40 - 50

3 Shanmugam Individual Shops Branded 500 – 1000 AKP Metallodrome, Bharat Times

40 – 50

4 Broad way Individual Shops Protein Stores & Whole-sale

1000 – 1500 AKP – Brass Antiques, Alapatt’s,

35 – 45

5 Palarivattom Individual Shops Supermarkets

1000 – 2000 Verkey's Backery and Supermarket

15 – 25

6 M.G. Road New Development Mall 2.2 acre land, 0.4 million sq.ft. retail & multiplex by Peevees Realties

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Cochin is still to see Malls. Some of the local developers are developing commercial complexes under the brand of Mall but all these projects are shopping centres with no proper zoning and theme. One such example is Esplanade promoted as a Mall that housed all the major brands; this development failed to catch the shopper’s attention due to access problem, zoning, product mix and theming. People of Kochi have good brand awareness but it’s only the mega lifestyle stores like Seemati and Jayalakshmi and mega jewelry

Seemati Textiles, Cochin

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stores like Alappat, Alukas and Josco who are the prime traffic movers and people are still waiting to explore the retail giants like Pantaloons, Shopperstop and Lifestyle.

Areas namely Panampilly Nagar, Shanmugam Road, Foreshore Road & Ravipuram in Cochin have primarily business class, middle and upper middle income group households. Their high disposable incomes and propensity to spend on family shopping and entertainment justifies the need for organized retail in the area. Kadvanthara, Girinagar, Jawahar Nagar & Gandhi Nagar are the new upcoming residential developments for middle and upper middle-income group households.

Upcoming Developments

Seeing the active real estate move in Cochin and flourishing NRI money in the state, population of Kochi and even neighborhing districts will witness the 2 upcoming malls of decent size of 0.3 million sq.ft. plus with theme development. One of the malls is coming in the heart of the city on M.G. Road on 2.20 acre of land with 0.4 million sq ft retail and multiplex development developed by Peevees Realties. This mall will also provide huge parking spaces, which will suffice the parking requirement of the customers on M.G.Road. Another comparable and well-positioned Mall is proposed at bypass road to provide one stop shopping and entertainment facilities.

List of Upcoming Malls in Kerala S.No. City No. of Malls

Proposed Remarks

1 Cochin 2 Cochin is a Commercial Capital of Kerala having 18 lac population.

2 Thiruvananthapuram 2 It is State Capital dominated by service class population having total population of 7 lac

3 Kozhikode 1 District Headquarter and an medium size city having population base of 4.5 lac

Cities with proposed malls in Kerala

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In many cities of Kerala, Gold jewelry has a major share in the market. Big players of gold jewelry are present in different cities and are doing well. In Thiruvananthpuram as on an average every big jewelry shop sells 3-4 kg of gold in one day. This demand has resulted in opening up of mega jewelry stores like Alappat, Alukas, Josco, Bhima etc with an average size of 5,000-6,000 sq.ft. and an average footfall of 300 – 400 during weekends. Looking at the success of this business, possibilities for setting up of Theme mall for Jewellery are being explored at Cochin.

Conclusion

The cities of Kerala have immense potential of becoming the most sought real estate destination from retail point of view apart from being the established international tourist destinations. The cities of Kerala are now showing an upward market trend & positive investment trend along with the increasing NRI population base with better international connectivity because of large number of international flights coming to city. Changing choice of people towards modern trend of shopping, awareness of the branded goods and inclination towards the Mall/Multiplexes clearly depicts the upward thrust of the retail market in the state.

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5. MUMBAI MILL DISTRICT: REAL ESTATE REGENERATION Realty Review- January - April, 2004 – edition

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The Mill District, which was playing the role of a major industrial area in Mumbai, is undergoing the process of transformation as the higher value added service sector crowd out lower value added manufacturing services. The prime tract of 208 hectares of land, out of which 43 acres is estimated to be under Government mills and the rest under private ownership, is possibly the largest redevelopment opportunity for Mumbai.

Some private textile mills out of the 58 textile mills in Mumbai, have commenced the process of real estate transformation, with Banks, Advertising Agencies, Leisure Halls have moved to the center of the city in the last few years. The market logic for this relocation is based upon the lower rent for the properties, large floor plates for business operations and central location within the city.

To add, there is a pattern to the kind of occupiers who are moving from the South of Mumbai CBD and other areas in the Mill District.

There are broadly two categories of occupiers moving into mill district. The first is the serious businesses or the “pinstripes” like banks, financial services who have realized the benefits of large floor plate – reasonably priced property within the heart of extended Mumbai. The other category is the “creative class of occupiers”, typically advertising firms, media and software firms for whom the cost aspect is important but the bonus lies in the unique feel of the area and the property.

In specific to Lower Parel, the transformation can be classified into the following stages:

Phase 1 – This started with the offer of office space in mill buildings in Kamala mills and the Phoenix mills during 1996 – 1999. This can be broadly defined as the “Breaking Ice” stage, when new occupiers moved into an untested location occupying “cheap but funky space” and alongside a few entertainment / restaurants commenced operations. Also there are instances of moderate response for some high end residential developments.

Phase 2 – Roughly between 1999 – 2002 – witnessed office occupier demand becoming stronger, with the emergence of new office developments in the mill complexes (development of new office towers in Kamala, followed by Piramals and Modern Mills). Conjointly structured retail property redevelopment notably in mills like Phoenix and Sri Ram, witnessing a substantial influx of retailers. On the residential property front, several apartment blocks rolled out and witnessed moderate to good take up, mostly from the upper middle-income bracket. Interestingly the top crust of the residential occupiers still have a “mind block” to move into such developments from South Mumbai.

Phase 3 – Hereon, the defining trends are likely to be driven by the second wave of re-developments that “raise the bar” in terms of the benchmarks for mill redevelopment through innovative mix of brown and green field developments and smart estate management. It is these redevelopments that would define the image and price yields going forward.

Phoenix Mills - Retail Redevelopment

The Phoenix mall developed by the Phoenix Mill Limited is a retail and entertainment complex redeveloped out of a group of mill buildings within a complex that has redefined the image and branding of retail developments in the mill district. The mall was part of redevelopment of an old textile mill. The redevelopment plan comprised of rolling out 1 million sq.ft in a mixed use residential, commercial and retail format.

The residential component of 300,000 sq. ft. comprises of two towers.

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200,000 sq. ft. of commercial space (partially constructed) has been leased to occupiers including Standard Chartered, Nokia, Computer Associates, UDV and Microland.

The first phase of 500,000 sq. ft. of retail space is occupied fully whilst the second phase comprising of multiplex and format retail of 300,000 sq.ft is under consideration. The scale of demand by retailers can be comprehended by looking at the following table:

Year Occupiers Total Area Occupied (Sq ft)

1999 The Bowling Co. FEC, Fire and Ice, Soul Kadi 29,000

2001 Big Bazaar, Pantaloon, Dominos, Barista Coffee, Mc Donalds, Funky Orbit, Planet M

1,12,450

2002 The Home Store, Bombay Blues, Provogue (Lounge), Lifestyle, Lush 62,200

2003 Pepe, Arvind Brands, Adidas, Spiker, Lacoste, Nike, Hangten, Madura Garments, Sweet World, Weekender, Arcus, Marcs & Spencer

47,150

As of date there is but scarce little space remaining to be tied up. Almost all the transactions signed up during the period 2001 - 04 were handled by Chesterton Meghraj retail agency division. Phoenix has definitely proved to be a pioneer as far as attracting the top of the line retailers. The previously built image along with smart marketing material and a sense of purpose got the redevelopment rolling.

This development however is not without exception. For one the redevelopment, much like Kamla Mills, its commercial redevelopment counterpart, lacked a predefined design for growth and a grand master plan, as result of which there is haphazard redevelopment taking place.

More interesting has been the 1st phase of the retail component of the mall admeasuring 500,000 sq. ft. This was designed on an open mall concept with large open spaces coupled with large format built spaces housing retailer, food and entertainment operators. The process was kick-started with the opening up of a family entertainment centre - The Bowling Co. and a discotheque "Fire & Ice" which attracted the initial footfalls and gave the redevelopment an "image".

The development has been definitely able to reuse the stock of existing mill buildings in a sustainable and efficient manner to line up a stream of rental cash flows that have become a foundation for the future phases redevelopment utilizing the two unique potentials of location and adequate parking (It offers the maximum number of car parks numbering 1000 car parks amongst any similar competing development). There has been steady increment in the value realization from almost all the components of the complex including offices, retail and residential.

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Kamala Mills - Commercial Redevelopment

Kamala Mills is a typical case of the Mill District redevelopment pioneer, which came up to fill in a gap. With 600,000 square feet of mills under conversion and development, into office space it has virtually become an office campus housing the Who's Who in the corporate world. The analysis of the development lifecycle of Kamla Mills is indicative of what has and what can happen with the Mill District. The table below depicts the incremental off take on a year on year basis.

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Year Occupier Total Area leased (Sq ft)

1995 National Stock Exchange 99,000

1997 NDSL 29,000

1998 HDFC Bank, KPMG, 0& M, Publicis Zen 98,500

1999 HDFC Bank, Times Bank 34,600

2000 Trackmail, HDFC Standard Life, HDFC Bank, Star TV, PSI Data Systems

241,000

2001 DHl 20,000

2002 IDBI Bank, Dainik Jagran 36,500

There is no proven formula to get the timing right in a flux market but Kamla Mill, redevelopment despite being the pioneer proves the fact. After the first spate of lettings in 1995, the big boost came in 1998, with nearly 100,000 square feet primarily being leased to blue chip Indian corporates and Multinationals, essentially allowing them to move out from "cramped quarters" in the traditional business districts.

The really large lettings started taking place only in 2000, where the take up exceeded all previous levels, on account of an establishment of the "image and safety" of the mills as a safe and tested location and also on the basis of the fact that not much competing supply was available. 2001 on the other hand again has been much of a watch and wait year, with other developments like Piramal Chambers taking up a fair share of the absorption.

Initial indications as at mid year 2004 reveal a quite moderate offiake on account of the widening supply canvas upcoming. There is also a qualitative aspect to the recent performance. Competition upcoming in the Mill District is new stock built to spec in a more planned format as compared to Kamla Mills where the development has been more organic with conjoint facilities and public realm appearing more as a reaction to the lettings.

But Kamla Mills has proved our previously mentioned theory that such developments with reasonable capital investment can incrementally experience increase in valuations.

By virtue of the mill district’s location, existing stock of the buildings, and above all by virtue of Bombay’s entrepreneurial energy and culture, the mill district could become one of the most influential “urban quarters” in Mumbai.

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6. KOLKATA: EMERGING RETAIL OPPORTUNITIES Realty Review- October - Dec, 2003 – edition

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KOLKATA: EMERGING RETAIL OPPORTUNITIES

The former capital of British India, Kolkata today forms the commercial and industrial hub of Eastern India. It serves as principal retail and services market to its vast hinterland that include the Eastern and Northeastern States of the country. The city serves as center of trade and commerce for the neighboring States and also caters to a large population base of 13.2 million. It is a city of contrasts, on one hand it is chaotic, noisy and decaying whilst still being vibrant, warm, dynamic and friendly. It is a place where the old and the new happily co-exist in the ever-continuing cultural ethos evolving over time.

Kolkata is like a big marketplace and there is probably no main road that is not lined with shops. There are small and big bazaars in every part of the city. Every residential area in Kolkata has its own neighborhood shopping market of varying size depending on the economic status catering to the basic needs of the local populace.

Long before the onset of mall culture in India, Kolkata was the first Indian city to see a pioneering effort in retail development with evolution of air-conditioned markets. Though these were of smaller format and were customized to the localised conditions, first amongst them being AC Market at Shakespeare Sarani, other prominent ones being Vardhan Market and Shreeram Arcade. Most of these complexes were in the range of 50,000 – 60,000 sft with average shop sizes varying between 100-300 sft of area.

Besides these there are several modern shopping complexes like the Metro Plaza, the Emami Shoppers' City and the Shreeram Market. The latest addition to this list is a new complex at 22 Camac Street and the Forum Mall at Elgin road. These projects have heralded the beginning of the era of international level retail experience in Kolkata. With the introduction of these new, larger and more organized retail formats in the city; its old markets are loosing their sheen. Mega markets of yesteryears like AC Market and Vardhan markets have seen a dip in their real estate value of 40 to 50%.

Kolkata’s coming of age as a hot retail destination was first acknowledged after Pantaloon’s Garihat outlet and Sony World’s Ultadhanga showrooms, which have emerged as the highest revenue earner per square feet for their brands on national level.

Kolkata offers a variety of retail formats to its citizen’s to experience. The retail markets in Kolkata can be classified as traditional markets, high street shopping, organized (small format) and organized (larger / medium format) as given below:- Retail Mosaic of the City

Traditional Markets Bowbazar market, Bagri market, Barrabazar market, Chandni market, China bazar and Lake market.

High Street Markets Park Street, Esplanade area, Camac Street, Shakespeare Sarani and Garia Haat.

Shopping Complex / Malls

Small format – non branded A/C Market, Vardhan Market, New Market and Shreeram Arcade

Small to medium format – non branded

Emami No. 1, Metro Plaza and Charnok City

Medium to large format - branded The Forum and 22 Camac Street are the only operational shopping malls in this category while there are 5 more projects in pipeline

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Kolkata has a large middle and upper middle class population forming a huge pool of potential consumers. As in the other cities of the country organized retailing is in it’s infancy but it is fast evolving. The prime retail destinations are located in Central Kolkata in and around Maidan. A few of the prominent high street retail destinations include Park Street, Esplanade area, Camac Street, Shakespeare Sarani and Garia Haat.

High Street Markets of the City Micro Market Profile Key Tenants /

Occupiers Rentals (Rs / sft / month)

Camac Street Located in Central Kolkata, this market has gained prominence in recent years as compared to the other well-developed markets in the city. It also has popular retail destinations like the Vardhan Market and 22 Camac Street.

Pantaloon, West Side, Gautier, Pizza Hut and Planet M.

100-120

Park Street Also located in central Kolkata, this is one of the oldest retail markets of the city. Many of the occupiers here have been here for more than one generation. It houses some of the oldest bars and restaurants in the city.

Music World, Barista, Oxford Book Store and Park Hotel, Levi’s, Oyzterbay

100-120

Shakespeare Sarani / Theatre Road

Located in central Kolkata this road was earlier known as Theatre road. With the opening of branded retail showrooms in recent years, this road has gained importance. Most of the well-known brands in Kolkata have a presence here. It also has the AC market, one of the oldest in the city.

Lacoste, Adidas, Nike, Reebok, Benetton, Zodiac, Allen Solly, Underlines and a few designer boutiques

90-100

The city is growing along Eastern Metropolitan (EM) Bypass, which connects North to South Kolkata. E M bypass is the major growth along which all major construction activities are concentrated. In the last few years, 2 five star Hotels have come along it and there are about 3 Shopping malls proposed along it.

Emerging Mall Culture

With the launch of first shopping mall of the city Forum in early 2003, the mall fever has suddenly gripped the city and has reached fever pitch. Many of the major developers in the city have announced such projects or are planning to enter the retail bandwagon. Forum has become one of the favorite shopping destinations in the city. It has average weekday footfall of between 5,000 – 7,000 person that further increases to 10,000 – 15,000 persons on weekends. About five malls and FEC’s are proposed in different parts of the city with major concentration along E M Bypass.

In short to medium term few more projects are likely to be announced in the city. The mall space in the city is likely to be augmented at the annual rate of about 0.4 to 0.5 million sft per year for next few years before getting stabilized. It is anticipated that in the next 3 years there would be about 2.0 million sft of mall space in the city.

City Center, Salt Lake and Metropolis, Highland Park are likely to be launched in 2004. They will have the advantage over the previous retail destinations in terms of a more contemporary appeal as well as convenient accessibility and adequate parking facilities.

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Incremental Mall Stock in Kolkata

-500

1,0001,5002,000

2003 2004 2005 2006

Year

Mal

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sft)

Inventory of Present and Future Stock of Mall Spacelkata

Project Name Location Area (sft) Status

Asking rentals (Rs / sft / month) Tenants

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Potential of modern retailing in Kolkata was always underestimated by retailing community in India. It has always been a very conservative and traditional market. However, with the success of Pantaloons and Forum there has been a complete reversal in the way it is perceived now. Today all major national and international

brands like Shoppers Stop, Westside, Pizza Hut, Planet M, Music World, Lacoste, Adidas, Nike, Reebok, Pepe, Cotton world, Levis, Archies and Barista have presence in city and those retailers who are not there yet, have expansion plans for Kolkata. With the mall culture spreading in the city local retailers have also started moving from high street to malls. This has given them a taste of new emerging retail trends in the country. Now many of these local retailers have expansion plans to different malls across the country. These developments have made local developers bullish about emerging retail format in the city. Most of the major city developers are already part of this Mall bandwagon or have plans for it. All this while it has been a win – win situation for the Kolkata citizens. Many elite of the Kolkata who used to go to Delhi or Mumbai for shopping can now have same facilities at their backyard. Shopping is no more a chore today, but a pleasurable experience and favorite pastime for many. Retail scenario in the city is all poised for major transition from high street retailing towards Malls / FEC’s.

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7. DELHI NEEDS REFORM IN URBAN DEVELOPMENT NOT GUIDELINES

Realty Review- July - Sep, 2003 – edition

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DELHI NEEDS REFORM IN URBAN DEVELOPMENT NOT GUIDELINES

The much-debated issue over the years and previously the headlines of the all news media has evoked fair amount of concern for future development scenario of Delhi. The centre of this debate is the master plan of Delhi, which is under preparation and for the same, Ministry of Urban Affairs has issued Guidelines. The much awaited master plan may only come for public comments after the elections but it is eagerly awaited.

The present guidelines of ministry is ready to turnaround the whole process of master planning and the basics of NCR Planning Board which is fundamental for organized growth of a city. This clearly shows the irresponsible attitude towards Delhi in the endeavor of making Delhi a world-class city by the Government. One fails to understand how flexible landuse will improve infrastructure and parking situation in Delhi, how regularization of violation in landuse will make Delhi world class, how a unfocused talk of public private partnership will bring in fortunes for the city of Delhi.

Is any one listening?

The last decade has been instrumental in reducing Delhi to a non-preferred work destination, courtesy archaic laws, adamant city administration, political interference and lack of will power in civic authorities. Probably it is the best example of -- how a national capital of a fast growing economy is no more a desired office address for a MNC starting operations in this country, certainly not more than a liaison office. This situation had been wholeheartedly enchashed by NOIDA and Gurgaon. There is something more important than city’s future, it is Citizen’s health and degrading environment, which prevents DDA and MCD to take action. One wonders how can DDA take a position that ‘the encroachment can not be demolished in DDA flats or commercial areas’. How long a poor law abiding citizen will pay for those who violate the building byelaws openly, put burden on infrastructure, create an urban blight, and DDA and MCD are somehow not taking action against it.

The Road Ahead

The urban development sector in this country cannot be addressed in this fashion. Now we are at the crossroads where cities have to respond swiftly in order to keep pace with the economic development. The growing need of dependable infrastructure, quality living conditions, improved amenities has to be responded rather than only collecting money after the regularization of unauthorized colonies and creating vote banks. DDA should initiate partnerships and should share the risk with developers (the way Kolkata is doing) if they are so convinced that the land in Delhi is so expensive, rather then digesting the profits in organizational inefficiency. It should look up to Bangalore and Hyderabad how effectively they have improved their urban management, with the use of technology and will power. Delhi should learn from Mumbai how effectively it has replaced slums in to a state of the art apartments. For example, it can be used to subsidize city’s infrastructure development and housing for economically weaker sections. The large tracts of underutilized land (R.K.Puram) of South Delhi should be recycled to optimize the potential for which FDI will pour in billions of dollars.

Delhi has to plan in long term not in medium and short term. It has to decide that what role it will take in twenty years from now in world forum. Is it going to be service based trade city or a cultural city or a fashion capital or an industrial city or a financial hub in world market and prepare itself for that long term vision. This vision will give the direction for development planning to cater to it and accordingly market forces will shape the city under the Government’s facilitator role. It is time that Government should realize that

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Delhi’s competitors are not NOIDA or Gurgaon but Hongkong, Singapore, Bangkok, Beijing and Kuala Lumpur.

It needs to be clearly understood that ‘a couple of glass façade buildings do not make any city world class, it is more important to ensure, how a garbage bin has been maintained around the corner or there is water in fire hydrant.’ Delhi needs Reforms not Guidelines.

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8. IT, ITES IMPACT ON REAL ESTATE IN BANGALORE Realty Review- April -June, 2003 – edition

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IT, ITES IMPACT ON REAL ESTATE IN BANGALORE

Information Technology (IT) in India has been making waves in the last few years. The IT sector has a special significance for India, because India’s competence in this sector has made it a net exporter of IT services. It has been the fastest growing sector of the nineties; and could very well continue to be so for some more time. The IT industry has three major components

o The IT software and services industry

o The IT hardware, peripherals and networking industry

o The IT enabled services

The software sector has already established itself as a fast growing sector and ITES is an outcome of last three years which includes services, such as call centers, transcription, data processing, online education, etc. mainly because of low communication costs and the trend of outsourcing non-core activities.

It is obvious for any modern city to have a significant presence of this industry, which is a creator of white-collar, high profile jobs and blooming multifold. In this article, we explore the role of IT sector and its impact on Real Estate Sector in Bangalore.

Bangalore - The Silicon Valley of India has advantages like abundant amount of skilled workforce, quality of living and brand value of city, better career growth prospects, availability of good telecommunication infrastructure and recent policy initiatives taken by the government etc but other factors like cost of real estate and accessibility to international destinations cannot be ignored. Bangalore has its own share of strengths and weaknesses in this regard.

Majority of the commercial developments in the city are been done by the Private Sector and BDA (Bangalore Development Authority) controls the growth process of the city.

City’s commercial market is delineated into three spatial limits CBD, Suburban and Peripheral. Bangalore has no true concept of Central Business District. This flexibility has resulted business grow from MG Road to other main roads such as Residency Road, Richmond Road and Brigade Road, Infantry Road and Cunningham Road.

The Prime CBD consists of MG Road, Brigade Road and by-lanes directly around these two roads. With the spiraling costs of real estate on MG Road and unavailability of good quality premium space, the CBD extended towards the North and South of MG Road. It has the cities most premium quality office space and retail outlets. Usage on Brigade Road is primarily retail and commands higher rental and capital value.

Some of the prominent streets in off prime CBD areas are Commercial Street, Infantry Road, Cunningham Road, Richmond Road, Residency Road, Millers Road, St.Mark's Road, Vittal Mallya Road, Lavelle Road. These areas have experienced strong development activities in the past few years. The advantage of these locations is reduced congestion, ease in availability of space, proximity to the city central and cost benefit relative to the city center.

The suburbs of Bangalore are classified as areas near to Airport Road, Koramangala, Indiranagar and Jayanagar. The peripheral Areas of Bangalore comprise of Bellary Road, Whitefield, and Bannerghatta Road.

Consolidation of real estate portfolios by both Indian and Multinationals (MNCs) Information Technology (IT) companies have lifted the real estate markets in Bangalore

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city. In this sector, both software and hardware have been the biggest contributor for the growth in Central Business District, off-CBD and suburban areas.

The city provides ample supply of large continuous floor plates in suburbs and most of the MNC’s prefer leasing as it offers flexibility when it comes to relocation.

Some of the shortcomings Bangalore must look into are city's infrastructure, especially power and telecom, which are not keeping pace with the IT expansion.

Demand for back-offices and contact centers have resulted in continued strong growth in suburban real estate development with leading IT companies like Intel, Hewlett-Packard, Microsoft, SAP, Convergys, Motorola, IBM, Cisco and Sun Microsystems lining up their investments for setting up new facilities in Bangalore.

Intel has taken 40 acres of land on lease for setting up a $41 million design and development center, while Motorola and SAP have taken 10 acres and 5 acres of land on lease respectively for addition to their existing R & D centers. Hughes is developing a state-of-the-art campus spread over an area of 2.5 acres and HP is setting up its 'Advanced Technology Centre' which would be the second of its kind in the world in Bangalore.

The interest of these MNCs clearly reflects that Bangalore offers many factors that are key in IT and ITES space. Growth in demand for back-offices and contact centers will result in continued strong growth in Bangalore CBD and suburban real estate developments.

Bangalore has absorbed about 1 million sq ft of commercial space in the first quarter of 2003. Bangalore is ranked 6th in India’s ITES cites and when compared with other related factors, the city stands second. (As per the study conducted by NASSCOM. Abridged details given overleaf)

AHMEDABAD 9 4 2 4 8 6 3 BANGALORE 8 7 6 6 1 1 6 CHENNAI 4 2 5 5 3 4 4 HYDERABAD 5 3 3 2 2 5 1 KOLKATA 6 1 4 3 7 7 5 KOCHI 2 6 1 1 9 9 2 MUMBAI 1 5 9 9 4 2 8 NCR 3 9 8 8 5 3 7 PUNE 7 8 7 7 6 8 9

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The city shall witness stable rental and capital values over the next few months as there is steady supply and absorption rates of Grade A office space. The proposed IT

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corridor' along the city's Sarjapur ring road shall see major real-estate activity over the next 24 months. While the prime office rental values in the commercial business district (CBD) of M.G. Road have taken a marginal dip, the rental values in off-CBD, suburban and peripheral Bangalore have remained stable. Approximately 2.75 million square feet of space is under construction and will be available in the market by the third quarter of the 2003 which will almost be equivalent or marginally lower than the demand.

The expected activity of the international airport project, which recently received Ministry's clearance, has brightened the prospects for building and construction industry in this corridor.

In the residential sector also the IT industry continues to be the primary driver as we see increase in the disposable income of middle class. Residential development activity is becoming increasingly concentrated in the Southern and Southeastern belt of the city. This is the IT corridor that stretches between Whitefield and Bannerghatta Road. Sadashivnagar and areas around M.G. Road continue to command the highest prices in the city. The demand for housing in this part of the city has been falling with the increasing popularity of alternative residential addresses like Koramangala, Jayanagar and J.P. Nagar.

Bangalore with a diversified industrial mix, a strong manufacturing base and a large cluster of world class info-tech firms shall enjoy the status of most preferred city by majority of ITES firms, multinationals and consulting firms.

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9. SPECIAL REPORT–‘NEHRU PLACE REVITALIZATION’ – Concluding Part 2

Realty Review- January -March, 2003 – edition

Part 1 concentrated on what has led to the decline while the second concluding part outlines the strategy that can help revive it. The Nehru Place district center in Delhi needs to be revived if Delhi does not wish to keep losing out on investments and job generation in the service sector to Gurgaon and Noida. This is the only space with which Delhi can fight back.

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The immediate issues and Focus

For the revival of Nehru Place to fulfill its role as a growth generator for the services sector economy it is necessary that we work on the following aspects which have been identified.

o Need for a new image.

o Need for a new makeover.

o Need to address transport related problems.

o Need to integrate with the urban context.

Need for a New Image

Nehru Place has grown and established itself as an office destination and whatever retail that has come up compliments it to this aspect. As a result, it becomes a ghost center after office hours and there is practically no sign of any activity after office hours. Only one single cinema screen sustains the activity but this is insufficient to support a varied retail format.

Solution: In order to rectify this a series of new activities should be added which can ensure something or the other keeps happening around the clock in the district center. The new developments other than commercial office spaces can be – a retail mall (1.5 lakh sft), small format hotels (for the travelling executives) with banqueting and conference facilities, a Fashion House (for high-end designer boutiques) and a cultural complex which can have an ethnic restaurant. The Fashion House is a novel concept proposed to position Delhi as the fashion capital of India and is conceived to make full use of the view of the Lotus Temple.

Need for a New makeover – the clutter has to go

Nehru Place also suffered due to the proximity of the slum developments which has come up on DDA’s vacant land. This resulted in an urban mess wherein the slum dwellers made use of the district center infrastructure and also resulted in a lot of illicit activities. The licensing of hawkers to put up stalls in the urban plazas without any aesthetic or zoning control further added to the mess. The rampant transgression of automotive vehicles right into the pedestrian plazas with little or no enforcement and the usage of the plazas for purposes of cleaning utensils by the surrounding restaurants has created unimaginable filthy environs for the foremost commercial destination of the nation’s capital. Add to this the visual clutter of unplanned signages and you have completed the picture of urban clutter.

Solutions: Remove the clutter and ensure strict enforcement for segregation of vehicular and pedestrian movement corridors. Have a separate hawkers zone so they can come along the main pedestrian spines only and not spillover into the plazas. Ensure a mechanism for maintenance and upkeep of public places and plazas by a separate agency either by giving them advertising rights or right to hold events in these areas.

Addressing the transport related problems – accessibility and parking issues

Nehru Place will be able to regain its lost glory only when we are successful in providing an alternate access to the district center. Presently the main access is from outer ring road and Lala Lajpat Rai road. Two sides of the district center are not effectively used for generating entry/exits. The present parking load of the Phase 1 of Nehru Place is three

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times the optimal capacity and hence parking happens on every conceivable location like over footpaths and green/open spaces. There is also little segregation of pedestrian and vehicular circulation. In fact the non redressal of traffic and transport issues have led to offices moving out of Nehru Place over the years. If this is to stop, DDA must address this first as it has city level implications.

Solutions: Have a new road behind the Lotus temple boundary from Captain Gaur Marg built into the Nehru Place complex. This can serve as an entry and exit point for all traffic coming from and going to East Delhi. At this moment this traffic uses outer ring road and thus it gets thoroughly congested. There is a need to augment parking capacity with multi level parking facility to supplement the one already under construction.

There is also a need to ensure that the circulation of the district center (of commercial offices) be separate from that of retail shoppers and those visiting the Lotus temple (tourists). Each caters to a different demand, offices need long-term parking, which can happen in multi-storeyed facilities, the retail shoppers and those coming for recreation need short term parking in open spaces. While tourists to Lotus temple need short term facility but predominantly for buses and vans/jeeps. The plan should address the needs of all without conflicts.

Need to integrate with the Urban context

The design layout of Nehru Place for the next phase needs to integrate the Lotus Temple into its environs. So far both of them are in splendid isolation. There is a need for a visual and contextual integration both in the conceptual layout and theme for the phase 2 of Nehru Place. One way could be the zoning of the Fashion House, cultural center and open auditorium around the Lotus temple so as to get the best views.

The other level of integration is needed with respect to the immediate neighborhood. This part of Delhi comprises of prime south Delhi residential colonies and there is a lack of regional green areas and recreation spaces.

Transformation envisaged

Once alternate approaches and exits to Nehru Place district center are developed, the resultant road congestion during morning and evenings would ease considerably on the existing approaches.

Once the Satyam Multiplex develops and the Shopping Mall comes up, they would act as a magnet and as a result the pedestrian street connecting them will undergo retail transformation based on nature of market forces. The present shops selling office stationery and the likes would get replaced by food retail and high street shops.

The Fashion House, which is a unique development would give a very niche positioning to the entire complex. The facilities created around the Lotus temple backdrop would create an ideal setting for unique events.

Once the activities are fully functional and entrenched, the entire complex would become a hub of activity at all times of the day and not remain dormant.

The plazas would revitalize once the cleanliness is ensured through a unique management set up for maintenance. Once events and product launches start happening in the plazas, the entire setting of the complex will change.

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The above suggestions as a part of the recommendations given to DDA by Chesterton Meghraj as a part of a study and the same may be implemented in part or whole over a period of time.

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10. RETAIL SPACE DEVELOPMENT IN INDIA

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Retail space development in India has gone through a change in the last couple of years. Indian developers have leap jumped most of the learning phases of International retail space development. Most of the progress has been as a result of closer interaction between the retail mall developers and the retailers. However, the success of this interaction and their end product delivery for the retailers, is yet to be established. This article takes you through the various positive influences in the retail space development that have occurred in the past 2 years in India.

Whilst the trend still continues, what has become evident is that no longer are developers jumping onto the bandwagon of constructing malls without good locations and without predetermined interest from atleast the anchor retailers. Starting then, the country now boasts of 200 odd malls all across which are either under planning, under construction or constructed.

For the purpose of abundant clarity, in this article we are defining malls with saleable space in excess of 60,000sq.ft. which includes retail, food and entertainment but not necessarily the multiplex component. Year 2002 saw the beginning of delivery of these malls to the retailers. Going forward circa 2003 will be an important year in the history of mall development in India with new malls opening up in cities like Kolkata and Bangalore and more malls opening up in Gurgaon and Mumbai. The total number of malls in operation by the end of 2003 should reach at least a dozen, if not more.

A brief look at the malls that are slated to open shows a steep rise in the malls opening in 2003.

It is interesting to note that most mall developments in India are pre-marketed on paper before the ground breaking takes place. Further the size of the developments were earlier being dictated by availability of buildable space which are now being commanded from long term strategic location view point. An example are the three malls under construction / partially operational in Gurgaon, which has now become a destination.

A birds eye view of the mall developments in various cities follows:-

Delhi (NCR)

The retailing activity, started back in 1995-96, when the first international fast food chains like McDonald’s, Kentucky Fried Chicken and Dominos, typically established outlets ranging from 1,500 to 3000 square feet in areas like Connaught Place and

We start with the year 2000, when the only malls existent in the country were the Spencer Plaza in Chennai, Crossroads in Mumbai and Ansal Plaza in New Delhi. Mall developers in India announced mall projects in every conceivable format at every available location with developers suddenly seeing retail development as the next money spinner in comparison to residential or office developments.

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Basant Lok. Thereafter, the success of departmental stores like Ebony and Big Jo’s, coupled with the demand for high end retailing led to dedicated retail projects being launched in Delhi. A prime example of this is the development of Delhi’s first major 170,000 square foot retail cum commercial development – Ansal Plaza in South Delhi.

In terms of retail property trends, Delhi has witnessed a “perk up” in the course of 2002. Whilst the potential of the large middle class consumers has been stated for long by analysts, recent trends show that investors, developers and leisure companies have started realising the profit potential of organised retailing in cities and are moving headlong into it.

Demand for retail space has not been restricted only to the city precincts. With names such as Adidas, McDonalds and AMF Bowling moving to the suburbs, areas like Sector 18 in Noida are witnessing construction of dedicated retail projects.

Demand for quality retail space from a new flush of retailers like Omega, Shoppers Stop, Bose, Arrow, Globus, West Side, Music World, as well as from the established ones like McDonalds and TGI Friday’s is now driving the retail market. In the food segment, apart, from the fast food chains, there is an increasing emergence of the concept of cafes and specialty restaurants like those prevalent in Europe.

With international concepts of leisure cum retail centers becoming popular, developers do understand the fact that upwardly mobile consumers do want leisure facilities like gaming, bowling, in tandem with retail shops and food and beverage outlets. This holy mix of retail and leisure could be the key to profitability of shopping/leisure centres in NCR , where such facilities are seriously lacking.

In fact, such has been the impact of this realisation, many developers in NCR are looking at reconfiguring their projects in order to suit the requirements of retailing and leisure activities. The supply response has been quite enthusiastic, with an estimated 0.75 million square feet of retail property in various stages of completion in and around NCR.

Apart from the only mall development Ansal Plaza, most of the other upcoming retail developments within the inner city of Delhi comprising of multiplex led shopping and entertainment centres, are in traditional DDA shopping centres. A sixth of the total space is upcoming in Noida Sector 18, primarily in the form of shopping and family entertainment centres. Ghaziabad though late to start is getting its fair share of attention and we expect that 2004 will be the crucial year for retail space development in Ghaziabad.

Delhi was at par with Mumbai in terms of retail mall space in 2002 with the addition of 70,000sq.ft. of retail space in Alankar all of Taneja’s. 2003 will see Delhi being left behind Mumbai in new retail spaces. Moreover Delhi is witnessing the concentration of developments in a few strategic pockets like Gurgaon, Noida and Ghaziabad. Whilst these pockets themselves are at significant distance from each other, in each of these pockets the malls are placed in close proximity to each other . For example in Gurgaon , three malls are coming up in a distance of half a kilometer.

Mumbai and Suburbs

Historically, retailing in Mumbai goes back several centuries with an enormous range of long established standalone retailing formats, whether in garments, food or other categories. Traditional areas like Fashion Street, Crawford Market and more recent ones

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like Heera Panna, Bandra Linking Road are testaments to the range, age and variety of retail activity in the city.

Mumbai retailing moved up a step, with the opening up of international food chains like McDonalds (1997) and Dominos, and when the first professionally managed departmental store, Shoppers Stop commenced operations in Andheri. This is not to say that departmental stores or food outlets were not present or popular. Beautiful Boulevard, Benzar, Premsons, Amarsons are a fine example of a high street store at Napean Sea Road and boutiques at Kemps corner are examples of how domestic retailers have tried to fill up the critical gap in retailing earlier.

Primarily, most of the suburbs, south of Andheri have been refurbishment of existing industrial property and some limited new developments. Quite a few entertainment-related re-developments are also taking place in the mill areas of Lower Parel. Whilst most of the northern and eastern suburbs retail property development comprise of greenfield developments apart from a few reconfigured industrial properties.

Based on announcements and real tenants secured, we estimate that there is a potential supply of around 28 malls, FEC’s and shopping centres proposed as of 2002 which are either under planning stages, under construction or constructed.

Source : India Property Research & Chesterton Meghraj Report 2001

Location wise Retail space development- 2003

There has been a significant announcement of new projects since 2001. Tardeo– lower Parel (mill district) area accounts for around a fifth of the total supply, largely on account of the large format refurbishment of mill property in lower Parel. In our location wise study in 2001 the lower Parel area was set to take up 30% of the total retail developments.

Other than the change in the lower Parel area, it is interesting to note that our location wise study of new upcoming mall developments in Mumbai in 2001 is largely similar to that in 2003!. Finally, it appears that there is some consistency in mall developments database for Mumbai.

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Kolkata

The city of Joy is probably the only metro with a heart. Retailing in Kolkata is traditionally at Esplanade (central) to the north is Shyam bazaar , and for south Garia haat. Kolkata unlike other cities has seen shopping ambience since a long time. Whilst the rest of the country was looking at street shopping , Kolkata had its many Airconditioned markets, shopping centers which were centrally airconditioned and where till recently shopping flourished. The popular shopping centers at Kolkata were New Market, A/C market, Vardhan market. Organised retailing by national brands was introduced by Pantaloons who came up at Garihaat and then in 22, Camac street. Food chains like Pizza hut (with its first 170 seater outlet of India), Mainland China, Barista , Westside are the other major chains, followed by plans to open outlets by Shoppers Stop at Elgin road and Salt Lake.

Kolkatta will be one of the few metros with a balance between demand and supply. Only a few malls are located in Kolkata and most have a non-conflicting catchment. Kolkata is one of the few cities where what is planned by the mall developers is implemented, whether it is the Saraf’s undertaking a mall at Elgin road or Bengal Ambuja constructing a mall at Salt Lake. Below is the list of six malls in Kolkata which with reasonable certainity we can say will see the light of day.

Mall Location Developer Area Year of

operation Occupiers

1 22nd Camac Street Camac Street Khaitans 150,000 Operational Pantaloon, West Side, Pizza Hut, Planet M

2 Forum Elgin Road , Kolkata Sunsam Properties

200,000 2003 Shopper stop, BE, Nike, Catwalk, Svorosky, Weekender, M&S. Multiplex (Inox) …

3 City Center Salt Lake, Kolkata Bengal Ambuja 200,000 2004 Shoppers Stop, Inox- Multiplex

4 Swabhumi Salt Lake, Kolkata Bengal Ambuja 80,000 2001 Local brands 5 Highland park EM Byepass ,

Kolkata KMGL 120000 2004 Big Bazaar

6 South City Mall A consortium of developers

300,000 2004 No occupiers secured as of yet

Hyderabad

Hyderabad is a city of roadside shops known locally as Mulgies . Even the most recent & up-market retail shopping areas like Somajiguda – Rajbhavan Road are developing along the road side. This has its positive aspects like providing a colorful street , façade, better illumination on streets during evenings and public safety from pretty criminals on roads. The negative aspect is however parking on the roads and obstacles to free flow of traffic.

Retail trade in MCH area has been traditionally concentrated in the old city in the CBD stretch from Charminar to Abids, Sultan Bazar to Begum Bazar and R.P. road – MG road in Secunderabad. Off late the prime retail market has shifted to the Somajiguda- Rajbhavan road. Shopping options currently available at Hyderabad include Big Bazaar (Abids) , Lifestyle (Begumpet Road- BR), Pantaloon (BR), Shoppers Stop , Chermas (a local Hyderabad based departmental store) and West side.

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Hyderabad retail market has changed pace. There is a growing trend of brand awareness in the city. The influx into the city of affluent people from other districts of Hyderabad is retail, growing in number with cyber executives, increasing NRI’s from Gulf and from the US which has helped shape up the retail market. Considering the demand from the consumers there has been a upsurge in retail projects in the city. A few of the retail malls under construction stages are the Prasad labs at Necklace road and Centre Point at Ameerpet.

Chennai

South India has always been the pioneer of the retailing revolution in India with the consumers used to supermarkets and organized shopping. Chennai has been the pioneer in the mall formats with Spencers Plaza operational since 1995. However beyond the initial foray , Chennai has been left behind in the race for malls. Although, all major national retailers in apparel and non-apparel segments are present in Chennai, yet apart from Spenser Plaza which is adding another 200,000 sq.ft. of space in Chennai there is no new format mall being constructed.

Bangalore

Whilst Chennai developers showed no inclination to join the retail run, Bangalore developers went the full way and have come up with new projects which are close to launch or already launched. These include the Leela Galleria – a high end mall, Victoria mall – a seamless mall on the Selfridges concept of UK, Forum at Koramangala a vertical mall and Garuda mall which is being built as a multiplex cum retail space along with multiple car parking level

Bangalore with its cosmopolitan culture and large IT working population has been a target market for most Indian retailers and the malls have found ready takers.

Whilst the performance of the malls in Bangalore needs to be checked in the long run, the malls are well planned and organized, better than the rest of the malls in the country.

Jaipur

Jaipur, known as the Pink City, is an important tourist destination of northwestern India and is also the state capital of Rajasthan. It has long been established, on tourist itineraries as the third corner of north India's golden triangle.

Being a tourist town, there is a large concentration of Hospitality sector in Jaipur. According to Rajasthan Tourism Development Corporation (RTDC) there are 121 registered Hotels existing in Jaipur apart from various unregistered hotels and paying guest accommodations available for long duration stay.

Many national brands like McDonalds, Pizza Hut, Shoppers Stop, The Home Store, Raymond have already set-up their operations in Jaipur. Mall mania is at a feverish pitch in Jaipur. According to various developers, the growth of retail is mainly led by the increasing tourism in the city because of the immigration of high number of domestic and foreign tourist population. Most of the prime retail hubs are located at M.I. Road, Tonk Road, C Scheme and Malviya Nagar.

Traditionally retail came up at the main bazaars in the Pink City area (Johari Bazaar, Badi Chopar and Choti Chopar). The retail developments have lately started shifting to the periphery of the walled city. The new city fabric is shaping up in the MI road, SC road, C-Scheme area and prime residential catchments of Banni Park, Raja Park, Lal Kothi, Malviya Nagar and Tonk Road.

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In the short run, Jaipur faces a oversupply supply situation of commercial & retail spaces and there is no speedy take-up of commercial spaces. Most malls have a high vacancy. The only saving grace is that there is a steady demand from new players attempting to enter the market.

Other Non-Metro Locations

Going on to the other non-metro locations, year 2000 saw the beginning of an era of non metro malls with the success of Rave 3 in Kanpur. Following the success story of this complex in Kanpur, developers from other non-metros initiated similar projects. Large format national players like Westside, Ebony and Pantaloons have started or are slated to start operating shortly in the non-metro cities of Baroda, Ludhiana, Indore, Nagpur etc.

The non-metro cities that have generated particular interest in 2002 and will deliver new retail space in 2003 and 2004 include Nagpur which already has the larger format stores of Westside, Pyramid (to open) and Big Bazaar ( to open). Vashi, a Mumbai suburb will launch Center One in April 2003, with Pantaloons as the main anchor. Other cities launching malls in the immediate future are Durgapur ( City Center) , Bhubaneshwar (Forum), Baroda (Inox) and Indore (Velocity). Significant activity is also visible in non metros such as Nashik, Lucknow , Varanasi, Coimbatore Cochin etc.

Whilst today the market is virgin with a handful of malls operational, its not long before the retailers will have wide variety of choice in malls. In the evolving scenario, there will be more to mall development than just space and infrastructure. With competition increasing, malls will have to redefine their objective and reposition themselves to select audience. We feel that soon malls in India would position themselves as specialty malls, local malls, regional malls, discount mall or destination malls and may be we will find our own terminology to classify them.

However, one major handicap in fulfilling this dream is the limited number of national retailers and lack of retailers under different categories such as white goods, utility services including, laundry, creche, entertainment etc. Mall developers are now beginning to go out of their way to accommodate these essential services and category retailers by offering them attractive financial terms.

Mall developers have begun realizing the essence of a long term proposition in having the correct tenant mix and the need to provide an entire consumer basket to make the mall a happening destination including the infrastructure to be provided, particularly car parking.

2003 will mark the beginning of the next generation malls. The first format of which will be the open format malls like the Selfridges in UK or the Macy’s. A case in point is the proposed Victoria mall at MG road Bangalore. These malls will provide a one stop feel in a world class ambience to consumers and still retain the distinct identities of the retailing brands within.

However, we feel a quantum leap in development of retail spaces will occur only when a few Governmental policy changes occur. Critical amongst these regulations desired are: * Permissions for vertical car parking and making these free of FSI. Probably the developers will then be willing to invest additional monies to develop vertical parking for a better convenience to consumers

* Common areas to be free of FSI regulations and lower limits to circulation parameter for retail spaces.

* Relaxation in restriction on height of retail spaces.

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With a plethora of malls coming up, the Indian consumer will compare and decide which malls they would frequent. 2003 will be a year to watch and learn from. Perhaps the future of retail space development in India will be wiser after this experience.

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11. BUDGET 2003-04: WHAT IT HAS TO OFFER TO THE REAL ESTATE SECTOR…….

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What this budget has to offer to the real estate sector:

The hotel industry has received a boost with the removal of service tax . Expenditure tax on tourist industry has also been removed. These will encourage more players to set up and stimulate the need for real estate space.

Infrastructure development initiatives cover 48 new road projects at an estimated cost of around Rs 40,000 Crore; National Rail Vikas Yojana projects worth Rs.8,000 crore, renovation/modernization of two airports and two sea ports at an estimated cost of Rs.11,000 crore. For these a sum of Rs.2,000 crore will be provided as initial contribution from govt.

The standard deduction allowed on rental property has remained at 30 per cent of rental charges.

Tax benefits for housing finance sector, remain the same.

Income from housing projects approved by local authorities up to 31/03/05 will now be exempted from income tax. This is bound to add to the already existing oversupply situation in urban areas causing property prices to remain stable or even decrease.

However we can expect housing loan rates to go down even further. The market feels that they will fall by another percentage point. The Budget's tax concessions on infrastructure for housing projects will bring down the cost of these projects by 5 to 6 per cent.

Government has allowed funds for private development of new airports at Mumbai, Delhi, Bangalore and Hyderabad.

Extended benefits for water and power projects will act as a fillip for infrastructure development.

The boost in housing and construction sector is expected to provide push to the economy because of the multiplier effect it has on 126 industries, which are dependent upon housing and construction industry

The Budget, 2002-03, has provided further impetus to the housing sector. The fact remains however that it strives to revive growth, achieve a greater degree of fiscal consolidation and provide long-awaited relief to the individual. The Finance Minister has attempted to provide a positive impact on the country's economy, without introducing any radical measures.

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12. SPECIAL REPORT–‘NEHRU PLACE A CASE FOR REVITALIZATION – Part 1

Realty Review- November -Dec, 2002 – edition

This two-part piece is focussed on the dilapidation of one of the major commercial spaces in Delhi which was once its pride in urban design and its need for revitalization and revival. Part 1 concentrates on what has led to its decline while the second part outlines the strategy that can help revive it. The district center in Delhi has to be revived if the capital does not wish to keep losing out on investments and job generation to Gurgaon and Noida.

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The grandeur and the decline

Nehru Place was the pride of Delhi’s commercial hub till the late eighties and was a viable alternate destination for commercial offices after Connaught Place for over two decades before the pheonix like rise of Gurgaon, which effectively throttled it and Noida which finally has indicated the death knell of Nehru Place. The coming up of commercial offices in the Okhla Industrial area also resulted in offices wanting low rental space to move in there thus squeezing the Nehru Place office space market. The other major issue was the poor maintenance of the complex which had no public conveniences and lack of maintenance and supervision.

The buildings in Nehru Place district centre which were built on independent plots auctioned to developers were planned with a strict architectural form which had no place for signboards. However the small format offices were immediately sold off to individual investors and not end users. Due to multiplicity of ownership there was no consensus towards making investments for the general upkeep and maintenance of individual buildings in Nehru Place district centre which has also been typical of many other district centres.

With the growth in the economy, the size and nature of office requirements of corporates changed. They wanted buildings which were centrally air-conditioned with power back up, adequate parking and large floor plates, which Nehru Place was unable to provide in the late eighties. As a result of this, the developers in Gurgaon encashed onto this need and thus the seed for what Gurgaon is today was sown. As a result the rentals and capital values dropped. The complex deteriorated in quality and ambience.

The project that was once conceived as the finest urban space in the nation’s capital and which had the “largest designed urban space to be seen by air – as its architect described it” was felled more by the lack of maintenance and inadequacies and less by market forces. The factors which led to its downfall in the order of magnitude were as follows:

S.No. Problem Implication Remarks 1 Smaller floor plates and

many investors in the buildings.

Does not suit modern office requirements. Reduced priority on upkeep and maintenance of common areas.

Not much can be done with the existing buildings.

2 Deterioration of common spaces and parking lots

The urban vistas planned have been converted into open yards for washing utensils, a place for hawkers who have been further given licenses, a place for wandering domestic animals, parking disused cars and a virtual free for all in terms of chaos.

No efforts for basic upkeep of the place was done.

3 Traffic growth and access problems

The unprecedented growth of traffic and narrow road capacities led to increased congestion and chaos. The lack of planned bays for chartered buses and unregulated entry and access led to chaos during office hours in mornings and evenings.

Traffic circulation has improved over time by closing certain sections and making the flow more regulated. The flyovers have also made its impact in streamlining traffic to a certain extent.

4 Design flaws No space for putting hoardings Has resulted in a visual chaos

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No planned public conveniences like public toilets.

Totally unhygienic conditions and urban blight prevails.

No clear demarcation of pedestrian and vehicular circulation or space for hawkers.

Hindered access and more chaos.

No zoning of Bus terminus within the district center where only a couple of bus stops would have sufficed.

Parking of buses and the workshops take up a lot of prime parking space which could have been better utilized for the purpose of the district center. These could have been in surplus land elsewhere.

Floor pavings, staircases in common areas are in a crumbling stage in many places.

Footpaths converted to temporary parking.

Inadequacy of parking norms is evident.

5 Lack of maintenance, supervision

Vacant plots were taken up by slums, generating a lot of illegal activities.

These have been removed recently, but slum dwellers are persistently coming back.

The Lotus Temple is the world renowned project and is now on the list of every tourist (both domestic and foreign). Kalkaji mandir is very famous and has numerous devotees thronging it on many religious occasions in a year.

It has its own access and parking demands which conflicts with the demands of road space by vehicles getting into the district center.

6 Zoning of conflicting activities in the vicinity

The proposed Astha Kunj is positioned as a spiritual garden next to the heavy traffic zone which will make it difficult to access.

Conflicting landuse, it should have been along the Yamuna waterfront or elsewhere. A public park for use by neighboring colonies would have made more social sense.

7 Area Presently Built (Phase – 1) -- 23.92 ha

Phase – 2 – 14.28 ha

No of Buildings 98 Proposed - 5 8 Total Builtup Area BUA

Phase – 1 – 4.274 million sft Phase – 2 – 2.1 4 million sft

Vacancy – Phase – 1 – 0.85 million sft (20%) Phase – 2 – In Planning Stage

9 Parking Theoretical Parking – 2250 ECS Existing Parking Load – 7280 ECS ( 3 times the capacity)

The above issues are a pointer to the mess the Nehru Place district center has got into. With Bhikaji Cama Place district center already full, Saket being positioned only for retail and limited commercial and hospitality developments and no other district center planned in South Delhi, Gurgaon has emerged as a natural choice for many who would have preferred a Delhi address, if available. Gurgaon, where there is no electricity for at least 4-6 hours a day, where drinking water is a problem and where traffic chaos is more than that in Delhi with no public transport available is stealing a march of what would have rightfully come into Delhi. These jobs which are going to competition are high value service sector jobs. Nehru Place which could have thrived in its second phase by the

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demand (which Gurgaon and Noida have observed) is beset by problems of shortsighted adhoc approaches. With the coming of the complex under DDA’s mantle we hope that the things improve and a suggestion to this effect will follow in our sequel.

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13. SPECIAL REPORT 1 – ‘EVOLUTION OF THE INDIAN MALL – A COMPARISON WITH MALLS IN DUBAI

Realty Review- October, 2002 – edition

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SHARJAH CITY CENTER

Most historians and experts believe that the developing economy follows the developed in each sector of development. However, developing countries improvise to suit local conditions and experiment further with the proven models. This has been our experience as well when we focussed on the evolution of organised retail spaces such as malls in India vis-a-vis the developed markets. Chesterton Meghraj team members have been following the retail markets worldwide to understand more about what goes into retail real estate and what emerges out as a winner. The Chesterton Meghraj retail team members planned a special study trip to Dubai. We are pleased to share our views and hypothesis in comparing the upcoming retail developments in India with those in Dubai.

Dubai, which retailers agree has evolved as a developed retailer’s market is the closest to the Indian market in terms of the profile of resident population since 60 per cent of the resident population in Dubai is from the sub continent region.

Retailers love to remind that location is the most critical parameter for retail to work. A casual probing would then differentiate between various location possibilities which include high street, convenience, out of town, destination et al Dubai being a relatively new city compared to the cities in India lacks a concentration of convenience

stores unlike India. Due to the low concentration of population, most convenience retail locations act as only food joints or convenient super markets.

The malls in Dubai, which now double as tourist attractions are mostly destination locations. Each mall location has an ease of access and ample parking facility. The concept of neighborhood and catchment is not of paramount criterion because most of the resident population in Dubai travels by cars. Unlike Indian malls, malls in Dubai like the Deira, Burjuman and Sharjah city centers are clearly destination malls and the criteria of immediate catchment population does not exist.

Malls in Dubai have a definite plan and strategy in selecting the occupier mix. Further there is a clear strategy in placement of the occupier within a mall. The occupiers could be segregated by type into high-end boutique or jewelry store, fashion, supermarkets, white goods, electronics, entertainment etc. Compared to India where adhocism prevails, retailers prefer ground floors and only as a fall back strategy agree to consider the clusters, which will be complementary to their trade.

We noticed that most malls in Dubai had strategically planned floor allocation and were stringent in the choice of retailers. Every mall in Dubai had an estate office that managed the retail mix and management of the mall post establishment. In majority of the malls, we noticed a detailed questionnaire was required to be filled in by a prospective occupier before an offer could be made to them by the estate office. The questionnaire enquired about the product category, brand strategy and brand positioning, which assists the estate office to offer space at defined terms.

Malls, which were over ground plus three levels vertically such as Lamcy Plaza in Dubai had a floor level segregation by products and brands. Malls that were only ground plus

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ANSAL’S PLAZA, DELHI

one level followed a cluster approach and had a clear segregation of products. For a case in point, food outlets were always found to be located on higher levels. Each of the malls that had an area of over 200,000 sq. ft. had anchors strategically spread out over the entire development. Interestingly, unlike India most malls in Dubai were not averse to parking on ground floor itself, while retail started from the first level. Basement car parking, which is so often found in India was rare in Dubai and even customers were averse to basement car parking.

Most of the malls in Dubai are located close to the Expressway or major roads. All of them had more than one access into the mall. In India, development of malls has followed the herd mentality. Any plot, which is available to the developer and is close to existing markets is converted into a mall. Access to a mall is not being given due importance in India. Only a handful of the many malls under construction in India can boast of clear

access, which is almost a prerequisite for developing a mall in Dubai.

In India, most developers provide one car park space for every 1000 sq. ft. of built up area. While this meets the requirement of the local authorities, the retailers find it inadequate for catering to their upwardly mobile customer. Developers are now coming to terms with the modified parking requirements of the retailers. Developers in India are now learning that adequate parking is a critical component of the shopping experience and it needs to be provided free of charge. Retail areas in Dubai provide covered car parking of at least 1 car park for every 400 sq. ft space and an additional open car park for every 500 sq. ft. where available. Multilevel parking which is still not prevalent as a norm in India is integrated well to the malls at various levels in Dubai.

One gray area in real estate in India has been the loading on to the ‘usable area’ (also called ‘carpet area’). While everyone agrees that there is a wastage component that can be attributed to common areas and circulation from what is built to what is usable, the accounting of the same evinces various reactions from developers. Mall developers in India have been traditionally charging 25% - 30% as a loading factor on usable area. An interesting phenomenon seen in the malls of Dubai was that all the leftover space was measured and billed on the usable area basis only, thus bringing in greater transparency. Perhaps this has a linkage to the way FSI is calculated by the authorities in Dubai. In Dubai, the common areas are not counted in the FSI, hence developers provide wide aisles and atriums. On the other hand, the authorities in India include the area consumed by lobbies and atriums for calculating FSI and hence it gets passed on to the retailer.

By ‘space’, we refer to the quality of construction, the floor to floor height and area between columns in the retail space created. Retailers use the volume of space available to them as a medium of interaction with the end-consumer. Most retailers love spaces with floor to floor heights of 16 feet. However the Indian developers have been used to constructing space of standard heights of 12 feet. In Dubai, we found all retail properties had adequate floor to ceiling heights ranging from 16 feet to 24 feet in the city center. This gives the retail space a sense of spaciousness. Column spaces in Dubai

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have a 8 metre grid or more, enabling the retailer to use the area leased optimally, unlike the space available for retail in India.

In literal terms, ‘circulation’ means flow. In the context of malls, circulation is the ability of the space to conveniently accommodate the movement of people around the mall both horizontally and vertically. Anchor retailers are strategically placed within the mall so that in the process of reaching out to the anchors, they are capable to attract customers on their own and the smaller retailers get foot traffic passing in front of their outlets. In the Indian scenario, unfortunately the developers do not pay particular attention to circulation space. There are malls that are being developed in India with narrow corridors and walkways with misplaced anchor space within the malls. Display spaces in Dubai malls were controlled. Fortunately the Indian malls, which have developed have followed the same pattern.

Façade or the external elevation of the property is an important aspect of aesthetics of a building. However, from a retailer’s perspective, this doesn’t add to the bottom line as it has little effect on enhancing the consumer experience in the mall. Most malls in Dubai had a normal façade, without much expense on the exterior elevation. Indian examples have been attempting to make spectacular facades, with most mall developers loading the cost to the retailer, thus making the retailer pay for something that they don’t want. While façade or external elevation is not an important factor from a retailers perspective, the interior of the mall such as lighting, flooring etc are of predominant interest to the retailers. Most malls in Dubai had elegant but simple interiors with flooring to suit the target consumer. The lighting was in sync with the theme of the mall or the theme of the section within the mall. For example sections with movies had darker interiors & colored lights with a focus on displays. Sections with food & children stores had brighter interiors. Wherever possible natural lighting was preferred, which meant glass or canvas covered atriums.

Mall promotions and activities are a regular activity in Dubai malls. Malls carried promotions involving all retailers on an independent basis. There were promotions like the bi-annual Dubai shopping festival, which was a collective effort of all the major mall developments in Dubai. Apart from this there were activities in each mall on a store level with frequent schemes and shows and offers. Some malls had surprise lottery prizes which provided excitement to the shoppers. Among the existing Indian malls, Crossroads and Ansal’s have mall management offices and a host of events on a regular basis. However, the new malls coming up are paying little attention to mall management and promotion activity.

The real test for Indian malls will happen only after the initial honeymoon period is over. The future will test the mall management’s abilities to attract the customer for the retailer within the mall on a regular basis

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14. SPECIAL REPORT 2 – ‘REGENERATION OF WEALTH FROM LOCKED URBAN ASSETS - A REAL ESTATE

PERSPECTIVE Realty Review- October, 2002 – edition

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Delhi has lost its initiative to Gurgaon and Noida as far as real estate development is concerned. The private initiative in urban development has conveniently relocated to these suburbs, which are growing at the expense of Delhi. All major new office, retail and residential developments are taking off in Gurgaon and Noida. People are finding the quality developments at these places more lucrative and viable proposition to the kind of developments offered in Delhi even if it means that they need to travel more.

It is not that there is a paucity of land in Delhi, but most of the developments even in Delhi are happening at its fringes at Narela, Bawana, Vasant Kunj, Papankala, Dwarka etc. People are reluctant to stay in these places, as there is lack of infrastructure and increased travel time. They feel it is better to stay and travel from Gurgaon and Noida than these areas because of quality housing and ambience.

A two - bedroom apartment in Gurgaon with amenities like swimming pool, gym, clubhouse, security etc thrown in costs around Rs 1.8 – 2.4 millions. Such residential developments are available in abundance where as a comparable development in Delhi will cost more than Rs 4 millions and the buyer has limited choice.

Delhi needs to rethink on its growth strategy that gives prominence to spreading out and think on the lines of redevelopment and redensification. There are vast pockets of land within the city which can be redensified to accommodate more people with appropriate infrastructure upgradation which will add more housing stock at places which are centrally located than create housing stocks at remote locations. The advantage of this is that these areas have an already established image and some level of social infrastructure which, a new area lacks and will take its time to develop.

Delhi’s urban fabric presents a varied mosaic of urban fabric, which has resulted in a patchwork of urban form. It has housing colonies by private developers which came up in the 1960s like Hauz Khas, Green Park, Panchsheel, West End, Friends Colony and South Extension. It has urban villages caught up in the swirl of the city’s growth as well as colonies developed by the DDA. A large area of National Capital which took shape after independence is in form of government housing, which is now one of the most upmarket pockets of the city. Colonies like Lodhi Colony, Kaka Nagar, Pandara Road, Sarojini Nagar, Kidwai Nagar, R. K. Puram. Andrews Ganj were planned solely to provide accommodation to government employees and bureaucrats in circa 1950s and 1960s. These are low-density housing developments and have now got caught up in the growth of the city. These government housing colonies are dilapidating fast and have lost their context in modern times. It is time that the planners think on the lines of redensification of such locked and under-utilised lands.

There is a huge diversity in densities of various districts in Delhi. South and South - west Delhi have density seven times lesser than the North and Central districts. A study done by Chesterton Meghraj reveals that there is an immediate need to address this issue to create a balance. The huge amount of profits from the redevelopment will not only resolve the city’s infrastructure problems but also contribute in reduction of travel time, improved efficiency and a vital contribution to exchequer in form of stamp duty and property tax, which is besides the direct profit from redevelopment.

As a case study, Chesterton Meghraj has studied the possibility of redevelopment of R.K. Puram as an example. Unlocking of 400 acre (164.59 ha) area can create miracles in Delhi’s residential market. R.K. Puram is in the heart of South of Delhi, abutting ring road on one side and Vasant Vihar on other. At present the average density in R. K.

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Puram is of 55 DUs/ha which is a very low density compared to the Master Plan provisions of 140 DUs/ha. Thus, there is an immense scope of redensification.

If redeveloped and provided with 1000 sq. ft. built-up area dwelling units (targeted at the middle class) it can support over 23,000 dwelling units against the present stock of only 9053, which is 2.5 times less than as permissible in Delhi Master Plan - 2001. If the focus is only on R.K. Puram and it is taken up for redensification, it will not only generate 13,850 more dwelling units but also generate a sum of Rs 10,390 millions to the developing agency as profit. This is over and above the probable house tax collection of over Rs 250 millions per annum and earnings on stamp duty and registration charges to the tune of Rs 5,000 millions which can be initialised for upgradation of the city level infrastructure. The new development at R. K. Puram will then be able to compete with the most modern residential apartment developments in the suburbs and will provide planned open spaces and ample amenities rather then haphazard and incidental open spaces, which is the present scenario.

To further analyse the locked potential, a detailed techno-financial analysis was done by Chesterton Meghraj which gives the possible profit as presented below: The hypothesis of this development is broadly detailed in two scenarios. In the first scenario, the existing government housing will be accommodated at R.K. Puram itself and in the second scenario the government housing will be shifted to an appropriate place in the periphery of the city.

Dwelling unit density DUs/ha

Rehabilitated in R. K. Puram

(Scenario-1)

Rehabilitated in DDA developed apartments in other areas

(Scenario-2)

Amount (in millions)

Additional amount to revenue dept. (in millions)

Total

(in millions)

140 √ 10390 3270 13660

140 √ 11610 5390 17000

160 √ 13740 4040 17780

160 √ 14670 6130 20800

180 √ 17060 4810 21870

180 √ 17740 6930 24670

Source: Chesterton Meghraj’s study on R.K. Puram

This is just the potential that R.K. Puram offers. When the colonies of Bharati Nagar, Kaka Nagar, Bapa Nagar, Sarojini Nagar, Chanakya Puri, Sadiq Nagar are considered, these areas are more prime and should offer higher returns to the developing agency. If all the above land parcels are taken up, then it should not be difficult to have a possible realisation of around Rs 60,000 – 80,000 millions. These figures can increase once a detailed analysis is undertaken for all such locked parcels under the Government. If these were to happen, then the probable outcome is either one of this:

o This can recover 75 per cent of the cost of Delhi Metro.

o The city could fund over 200 flyovers (at Rs.300 millions each).

o Water and power supply augmentation plans can be undertaken free of cost.

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If seen in totality, this can:

o Add the vital housing stock in the city at central and established locations.

o Take care of the present under-utilization of land and bring them up to at least the masterplan densities.

o Initiate private sector involvement in the development of quality housing again.

o Add substantially to the cash reserves of the local developing agency for creation and improvement of city level infrastructure.

o Generate a thrust to the city’s economy as construction activity has a much wider spillover effect.

As per Chesterton Meghraj, these issues need to be addressed in Delhi Master Plan – 2021, which is under preparation. Delhi has to review its policy towards government housing colonies and locked lands. The local agencies should now be prepared for massive redevelopment of city after fifty five years of Independence. This will not only finance the new government housing and infrastructure but also generate hefty profits for the government.

Key issues that need to be addressed in the new Master Plan are:

o Densities for multi-storied development should be increased from 140 DUs/ha.

o Redevelopment policy should be formulated for low - rise government housing areas as it has been done in Mumbai for the textile mill lands of South Mumbai.

o Private developers and possibly FDI should be brought in residential sector for large scale development to compete with DDA

o DDA’s supremacy should end in middle class housing.

There are ways to solve the city’s infrastructure funding issues, be it the Delhi Metro or its flyovers, real estate offers the potential provided. There is a political and bureaucratic will and pro-city civic initiative from business and the resident community. After all, cities are not made by real estate. It just gives it the flavor. Cities are made by the people who reside in them and the planners, politicians and bureaucrats who run it

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15. SPECIAL REPORT – ‘MUMBAI REAL ESTATE – BOOM OR BUST?!’

Realty Review- August, 2002 – edition

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SPECIAL REPORT – ‘MUMBAI REAL ESTATE – BOOM OR BUST?

Mumbai is the financial capital of the country and its high real estate values makes it to one of the expensive cities to stay and work in. The situation has been confounded partly because of the geographic profile of the city which essentially necessitated a linear development and partly because of the fact that there are vast pockets of underutilized land pockets which still have been unable to realize their full potential. This is due to archaic land related laws and legalities, which don’t permit the owners to develop their lands and reap the benefits as well as create a much needed supply of space for residential and commercial development.

The Bombay Port Trust has around 1880 acres of land which can be brought into the market and there are many old cotton textile mills which have either closed down or have been declared sick, which can further add to this supply. Most of these mills are centered around Lower Parel and Dadar region and National Textile Corporation Limited (better known as NTC) itself owns around half of these covering an area of over 180 acres. Out of 25 mills owned by NTC in Mumbai, 21 mills have been proposed to be sold, once all their encumbrances are removed.

Some mills in the Lower Parel area like Kamla Mills and Phoenix Mills, which had private ownership, have successfully undergone urban regeneration by having successfully repositioned themselves as destinations for retail and entertainment as well as boasting of quality commercial and residential developments. Likewise, there exists a great potential of developing quality space in the other mill sites as well.

The development of the 21 mills of NTC will create over 8.6 million sq. ft. of space out of which over 2.6 million sq. ft. would be handed over to MHADA for public housing and the balance 6 million sq. ft. would be made available for commercial utilization. In terms of Transferable Development Rights (TDR), the developers of these 21 mills will get around 2.9 million sq. ft. to be built in suburbs of Mumbai. Hypothetically speaking, this translates to 2600 flats of an average of 1000 sq. ft. per flat on super-area for MHADA and 6000 Developing Units for the developers. Thus adding 8600 Developing Units or a population of over 40,000 if only residential development is constructed on these 21 mill lands.

Alternately, if commercial development occurs on 7 mills, which are in the prime commercial locations, of the 21 mills owned by NTC, then a supply of over 1 million sq. ft. of office space is possible. Overall, this can result in probable realisables of over Rupees 120 million to 130 million based on the following assumptions:

• The sites are free from all encumbrances and legal issues.

• It would be possible to provide adequate support city-level infrastructure.

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• It would be possible for the existing transport infrastructure in the region to handle the increased load.

The release of such a large supply at preferred locations would create a surplus which many developers might dread as it may impact their ongoing developments. Residential developments are not likely to have much of an impact, it will only stabilize the prices at a slightly lower level. The office market is however likely to see more of a cut-throat competition from the developments in Bandra-Kurla and Andheri-MIDC region. The coming into the market of these mill lands thus can be perceived both as a threat and an opportunity.

If this is the impact likely to be because of the development of locked lands of NTC, the impact of Bombay Port Trust lands coming into the market will definitely create upheaval in the real estate market of South Mumbai. Even now corporates are not that keen on Nariman Point and this prime CBD of Mumbai is now showing increase in vacancy rates.

If by the time these locked lands are introduced in the market, the FDI in real estate is further liberalized to construct development of standalone residential and commercial projects, then Mumbai will definitely see world class developments coming up at realistic prices.

It will be interesting to wait and watch how things unfold in the financial capital of the country.

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16. SPECIAL REPORT – ‘THE PREVAILING RETAIL SCENARIO IN CHENNAI’S REAL ESTATE MARKET’

Realty Review- June, 2002 – edition

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In the national context, Chennai has been the starting point for high profile organized retailing. In fact it is only in Chennai that all the prominent retail chains including Shopper’s Stop, Ebony, Westside, Lifestyles, Pantaloons and Globus have set up their stores.

Retailing Corporates like Foodworld, Vivek & Co., Subhiksha, are headquartered in Chennai and they had pioneered the format of high-powered retailing. Chennai continues to be a destination for national retailers due to the relatively low cost of real estate as compared to the other metros. Infact, the department store chain Ebony has opened their largest store in Chennai. However, Chennai

now faces shortage in terms of good quality retail space. Retailers from Mumbai and the other metros have not been able to secure good quality retail space in the micro markets of Chennai. Most of these retailers belong to the Textile and Food & Beverage sectors.

We can classify the prominent retail points in Chennai as the following:

o Malls / Retail Complexes – Spencer Plaza, Ispahani Center

o Macro Markets – Nungambakkam High road, Anna Salai, Dr. Radhakrishna Salai

o Micro Markets – Anna Nagar, Adyar, Alwarpet, Besant Nagar, T.Nagar

o Suburbs – Thiruvanmiyur, Mogappiar, Velachery

There are only two malls / retail complexes namely Spencer Plaza and Ispahani Center in the city that offer quality retail space and invite high footfalls. Both these shopping destinations are located relatively close to each other. Opening of the third phase at Spencer’s Plaza has still not sufficiently satisfied the spurt in demand of good quality retail space in the city.

Other than these two complexes, the other important retail shopping destinations or the macro markets include Nungambakkam High Road, Cathedral Road, Mount Road, Second Avenue at Anna Nagar, North Usman Road, G.N Chetty road in T.Nagar, T.T.K Road at Alwarpet and Sardar Patel Road in Adyar. Whilst Usman road is the retail hotspot for textiles, Besant Nagar attracts national Food and Beverage (F&B) outlet operators due to its proximity to the beach. However, these markets face a dearth of good quality retail space on the ground floor.

Due to no fresh supply of quality retail space coming into the market in the near future, the prices of existing retail stock could spiral upwards. The prices in the retail sector in the short term are expected to escalate marginally due to the shortage of retail space and not due to increase in the purchasing power of people. This could set a dangerous precedent wherein the retailers could end up paying a higher rental against the same sales.

Retail Market Prices Location Market Rates

(Rs per sq.ft. per month) Select list of retailers present

Spencer Plaza 70 Pantaloon, Westside, Landmark, Food World, Music World, Allen Solly and Arrow

Ispahani Center 75 Indigo Nation, Coffee Day,

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Swaroski, Archies Greetings, Marry Brown and Hidesign

Macro Markets Nungambakkam High Road Dr. Radhakrishna Salai Anna Salai

40 - 60 40 - 60 30 - 40

Nike, Reebok, Pizza Hut, Landmark, Ebony and Genesis. Elite, Gaitonde Raymond, Color Plus, Arrow, Allen Solly, Indigo Nation

Micro Markets Anna Nagar Adyar Alwarpet T.Nagar Besant Nagar

25 - 40 25 - 40 30 - 45 30 - 50 20 - 35

Vivek & Co., Food world, Gautier, Crocodile and Allen Solly Foodworld, Pizza Hut, Health & Glow, Nike and Indigo Nation Bata, Lifestyles, Allen Solly and Eating Joints Nalli Silks, GRT Jwellery, Foodworld, Vivek & Co. Foodworld, Cascade Restaurant, Cakewalk

Suburbs Thiruvanmiyur Velachery

15 - 30 15 - 30

Foodworld and Vitan Vivek & Co., Foodworld

The rental rates mentioned above are for bare shell spaces without air conditioning or power backup. Developments with multiple occupiers typically charge a maintenance fee for the common facilities like escalators, house-keeping of common areas and security. This usually ranges between Rs 2 - 3 per square feet per month. Incase central air-conditioning and power back up is provided, there is an extra charge of Rs 6 - 7 per square feet per month.

While the macro and micro markets attract all types of retailers, suburbs mainly attract supermarket and white goods retailers in Chennai. Markets like Anna Nagar have developed into mini towns by itself and all types of retailers are found there. Infact, Second Avenue in Anna Nagar is developing into a retail hotspot in the city. This is due to the upmarket populace that is found in this location.

Hence, it can be seen that the retail market is heavily concentrated in Chennai. As far as the retail market for consumer durables is concerned all changes take off from Chennai. It has emerged as the main hub for entire south India. This can be exemplified by Subhiksha, which started its service in 1997. Beginning its journey at Thiruvanmiyur, this retail chain now has forty-nine branches spread across different parts of the Chennai. Chennai is rightly known as the ‘Retail King of India’

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17. SPENCER PLAZA, A RETAILER’S PARADISE Realty Review- April, 2002 – edition

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SPENCER PLAZA, A RETAILER’S PARADISE’

Spencer Plaza is the first, most modern and the largest shopping mall in India. Spencer Plaza is located on Mount Road, amidst the central business district of Chennai.

Spencer Plaza is a shopping mall cum office development. It consists of four phases. The 1st & 2nd phase has been completed whilst the 3rd phase is in progress, which will be inaugurated by May 2002. Thereafter the 4th phase will commence. The total area in the mall cum office complex is 1.085 million sq. ft.

The plaza already has all the nationally known large format stores such as Food world, Music world, Land Mark, West side, Pantaloon and Bata within itself. All the top brands in the country including Levi’s, Lee, Arrow, Florsheim, Colorplus, Titan, Timex, Louis Philippe, Sculler’s, Trouser Town have stand-alone stores.

The rentals offered here are in the following price range:

1. Shopping mall - Rs.65 to 70/- per sq.ft. per month

2. Office space - Rs. 40/- per sq.ft. per month

The current occupancy levels are 85% in the shopping mall and 60% in the office space. Spencer Plaza attracts over 20,000 shoppers in a day and this footfall is expected to increase to 50,000 shoppers in the near future.

The following features of the 3rd phase of Spencer Plaza ensure a substantial amount of shopping traffic:

o The entire planning in Spencer Plaza has been designed on a 45-degree angular grid ensuring that the movement of the people from various entrances is towards the third phase.

o The third phase will boast of the largest atrium where several events / activities will be conducted to pull in the shopping traffic to Spencer Plaza.

o It will have the maximum amount of car parking space (approx.300 car parks in two basements and approx.300 car parks on the second and third floors).

o The third phase is also likely to have a food court / entertainment center on the second floor, which will draw the crowd into Spencer Plaza.

o Well-planned layout ensuring good circulation for the shoppers.

Spencer’s also believe that the third phase would be an ideal location for retail outlets. The retail outlets will not only improve the shop sales but also build

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18. ROLE OF REAL ESTATE IN FINANCING INFRASTRUCTURE PROJECTS

Realty Review- February, 2002 – edition

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ROLE OF REAL ESTATE IN FINANCING INFRASTRUCTURE PROJECTS

Infrastructure development is the key to economic prosperity of a nation. The development of transportation, physical and social infrastructure goes a long way in attracting investments for setting up economic generators and further downstream development in a country. The infrastructure projects are highly capital-intensive, have long gestation periods and carry a certain amount of risk in terms of anticipating returns and hence if they fail they are very difficult to salvage.

The infrastructure projects can be categorized into the following:

• Transport infrastructure: Ports, highways, airports, toll bridges, railway stations

• Physical infrastructure: Power, water, sewerage, solid waste disposal, telecom etc.

• Social infrastructure: Educational institutes, hospitals, medical facilities, schools etc.

• Tourism infrastructure: Hotels, resorts

• Industrial infrastructure: SEZs, industrial parks, IT parks etc.

All these projects suffer from possible failure arising out of time - overruns, cost - overruns, high cost of debt servicing, wrong projections / demand assessments and when projects are supposed to come up in synergy, they don’t come up. These risks can be hedged to an extent if the role of real estate development is in-built into the project cycle.

Generally any development in an area, especially infrastructure development will result in a spillover demand in some other sectors. It will make some areas more prime than others and thus result in increased real estate values. The key is to predict this increase and tap the real estate dynamics to generate profitable returns and thus hedge the risks to an extent.

Then how can real estate consultants help?

Ever since the Indian cities have gone ahead with formalized urban planning, a lot of plans have been prepared and implemented. In many situations, the development has not kept pace with the times and the plans have been implemented in parts. There are some very basic tenements of development – that whatever that is planned should be built and whatever that is built has to be sold. However, it should not just stop at that and whatever that is sold should be occupied (put to use). One thing to be remembered is that what can’t sell will not appreciate in value. The aim of successful development processes should finally create good real estate assets and in this real estate consultants can play a key role.

Real estate consultants can add value to the planning process because of the following:

In-depth market knowledge: They know what real estate products will sell. They will know the demand-supply parameters in a place.

Competing development attractiveness: They will know which places are more attractive to make an investment. They can evaluate competing developments and see what way a particular development needs to be positioned in order to attract investors.

They will be the best people to advise on what will sell, at what price and after how long and so far it is still an unrecognized role in the planning process.

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A real estate consultant can assist in:

1. Positioning and pricing of the various projects.

2. Giving inputs for marketing and disposal strategy (what to sell and when).

3. Validation of returns pertaining to real estate. Every infrastructure project has a real estate component and this component can be validated for the client to ensure reduced risks.

4. Identifying viable R.E. (real estate) projects to supplement revenue streams for infrastructure projects.

There are various possibilities that can be looked into incorporating the R.E. component into infrastructure project, some of which are given below:

• ‘In-lieu-of-development’: This entails giving a plot of land to the developer at place A for undertaking an infrastructure project at place B. It is possible to financially structure projects at both places and after having incorporated the developers profit margins, a patch of land can be identified for him to recover the same. It is similar to slum TDR – which happens on the same site while this can happen in different cities but within the same state.

• ‘Direct spillover of the project’: Real estate opportunities sometimes arise directly out of an infrastructure project like the possibility of development of lands along highways, near toll bridges, airspace development over railway stations.

• Improve cashflows: Many projects like SEZs, industrial parks etc have core and non - core activities. While the core activity would be like industrial plots, built-up units, non-core activities would comprise of supporting activities like leisure and entertainment, hospitality etc. These non-core activities, in a way, hedge the risk of the developer because they will sell anyway even if the core activity does not take off as predicted.

In order to make things happen there are a variety of project structuring arrangements which can be explored. The key players to any development project are the developer, local body, FIs, the user and the RE consultant, each having his own priority and role.

At all the stages and in all possibilities real estate consultants can play a positive part in guiding the planning process and see that the developments proposed meet the market requirements. It is time that the local planning authorities and financing organizations took a look at this and incorporate the component in future projects.

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19. GUEST FEATURE – ‘Ludhiana – The Next Retail Boomtown?’

Realty Review- Nov- Dec, 2001 – edition

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GUEST FEATURE – ‘Ludhiana – The Next Retail Boomtown?

Ludhiana, the Manchester of India, has been famous for being the hub of the Indian hosiery industry apart from being an industrial and trading location. However, with the advent of structured retailing, the city is now emerging as one of the vibrant retail markets in Northern India.

The structured retailing business has come as a natural extension of the robust wholesale and manufacturing base already present in the city. Its good connectivity to other cities in Punjab and northern India and its large high income fast growing consumer market has provided a fillip to structured retailing, a phenomenon that is quite recent.

A recent study conducted by Chesterton Meghraj International Property Consultants reveals that there is transition of retail activities in the city that started from traditional areas like Chowra bazaar and Ghumar Mandi to the new high street of the city, Mall road. The traditional areas are typical of traditional linear retail centers present in almost all cities in India. These markets have been traditionally associated with textile and hosiery shops but also incorporate a fair share of jewelry stores, readymade garment outlets and bookstores. And as is typical of such markets, congestion comes in tandem.

Mall road on the other hand is the new ‘happening’ location for large format retailers as well as for the middle and upper strata in the city. A relatively large road width (about 100 feet) has ensured adequate parking facilities as of now. Originally, a prime residential stretch, Mall road is now dotted with high rise retail and office complexes, which cater to the ever-growing consumer class. Commercialization of Mall Road started with the development of the Red Cross building and Surya Kiran in the mid ‘80s. However, in the late 90’s, there was a spurt of growth of retail developments, which has resulted in what is seen on

ground today. A snapshot of the type of developments existing and proposed on Mall road is as follows:

Project Name Area (in 1000 Sq. ft)

Location Year of Commencement

Prime Occupiers

First Mall 18 (Retail)

30 (Comm)

Mall Road 1995 HDFC, Adidas, LBW (Reebok, Lee Cooper, Pepe, Red Tape), IPCL, BLCC, Ganpati Jewelers

Surya Tower 38 (Retail)

60 (Comm)

Mall Road 1999 Ebony, Nilibar, UTI Bank, Home Store, Raymond’s, S R M R Jewelers, New India Assurance

Capital Plaza 13 (Retail)

18 (Comm)

Mall Road 1998 Lord Krishna Bank and ATM, Capital Plaza Departmental Store

Carnival Arcade 14 (Retail)

35 (Comm)

Mall Road 1997 Color Plus, Wimpy, Nike, GIVO, C-DAC, Oracle

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Lodhi Complex 13 (Retail)

23 (Comm)

Mall Road 2000 Sportsking, Metro Shoes, Webcom

Mall Plaza 16 (Retail)

40 (Comm)

Mall Road 1999 HDFC Bank, ICICI ATM, Win Cable, Web City

Surya Kiran II NA (Retail & Residential)

Mall Road 1997 Diwan Saheb, Sant Classic, Aristocrat Gallery

Central Mall 30 (Retail)

50 (Com)

Mall Road 2003

Golden Plaza 9(Retail)

9 (Com)

Mall Road 2002

Caliber Plaza 200 (Retail) Near Clock Tower

1997 Retail & Wholesale market for cloth and readymade garments

Minerva A/C Market 50 (Retail / Comm)

Near Clock Tower

1994 Archies, Medicine whole seller, Cargo services, Vemicol

The branded retailer movement started in the late 1990’s with the influx of brands like Reebok, Nike, Levi’s, Red Tape, Color Plus, Ray Ban, Raymond’s, Ebony, Nilibar, Diwan Saheb, Annz, Metro, Sport King and a host of Indian banks opening up branches. Apart from this, there have been quite a few new departmental stores, which have opened up in the Mall road area. As of now, this area has acquired a sort of a critical mass of retailers and brands, which has greatly increased Mall Road’s appeal to consumers with a positive effect on property values. The following table indicates the prevailing rentals in the various markets in Ludhiana:

Rentals in different markets in Ludhiana

Location Rentals (Rs per sq. ft per month)

Mall Road 65-90

Feroze Gandhi Market 60-75

Ghumar Mandi 60-80

Around Fountain Chowk 45-55

Sarabha Nagar Market 65-75

Pakhowal Road 30-45

The other emerging retail market of Ludhiana includes the Feroz Gandhi market, (a commercial area housing showrooms of Titan, Lee, Arrows, Tanishq, Aristocrat Gallery and Cutes Camp). Smaller pockets of retailing within prime

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residential localities include Model Town market and Sarabha Nagar markets. Over the past few years, Sarabha Nagar Market has emerged as the most preferred eating and excursion location. Presence of Malhar cinema in vicinity of this market also attracts large number of people from different pockets of the city. The new group of food and beverage retailers in the area includes Barista, Dominos and Hot Breads.

A comparison of the markets is as follows:

Market Type Remarks

Chaura Bazaar Traditional wholesale/ retail market of hosiery and textile

No provision of parking, linear shopping, and expansion forcing retailers to open shops in other parts of the city as well

Ghumar Mandi All kind of retail showrooms varying from hosiery, readymade garments, food and gift shops

Poor parking facilities, linear shopping, most of the development is at ground floor only

Mall Road Multistoried shopping complexes are coming up wit big showrooms of readymade garments, jewelers, designer clothes and shoes along with departmental stores, fast food, banks, ATMs etc.

If development is properly regulated and provision of parking is taken care of, have very good potential to develop as future retail hub of Ludhiana

Feroze Gandhi Market

Main commercial area of the city with showrooms of Tanishq, Titan, Arrow and Lee along with branches of various banks, financial institutions, automobile shops and retail showrooms

Good parking facilities

Sarabha Nagar Market

Many food retailers like Barista, Hot Breads and Dominos are located in this market

Most preferred eating and excursion location in the city with good parking and infrastructure facilities

Ferozepur Road Mostly marriage palaces and hotels, Aarti cinema hall and localized retail

Good parking facilities

G T Road Large auto showrooms and localized retail

Good connectivity and parking facilities

Overall, Ludhiana is fast emerging as a vibrant retail location for branded new retailers looking at establishing themselves in upcountry markets. The rapid expansion of existing retailers in Ludhiana is indicative of the potential of the market, which is all set to become one of the retail destinations of northern India

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20. GUEST FEATURE – ‘THE CHANGING FACE OF RETAIL PROPERTY TRENDS IN JAIPUR’

Realty Review- Oct- Nov, 2001 – edition

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Jaipur, the capital city of Rajasthan is one of the world’s first “planned cities”. Surrounded by the hill ranges on two sides, Jaipur is famous all over the world for its historical and architectural features. Jaipur is also known for its colourful textiles, tie & dye fabrics, exquisite gold & silver jewellery, gems and precious stones.

Walled City

The walled city of Jaipur, known as the Pink City, serves the requirements of many trades by providing both wholesale and retail markets. Most of the wholesale trade is located in congested ‘katlas’ and narrow side lanes of the walled city while the major retail trade is on the famous roads and bazaars. The walled city of Jaipur is a shoppers paradise in itself, both for the local customers as well as for the tourists. Johari Bazar is the wholesale market for silver, gemstones and

jewellery. A large square called the Bari Choupar is famous for Jaipuri quilts, lac bangles, tribal jewellery, besides leather jutis (slippers) and readymade garments. To the left of Chaura Rasta is Kishanpole Bazar, famous for its wooden furniture. Further west of the Kishanpole Bazaar, a popular shopping area known as Khazane Walon Ka Rasta, where varieties of stone carved sculptures are on display and for sale. From Ajmeri Gate, New Gate, Sanganeri Gate a narrow lane goes along the wall, parallel to M.I. road whose name changes as it runs from one Gate to another as Indira Bazaar, Nehru Bazaar & Bapu Bazaar.

Outside Walled City

Jaipur has also experienced a spurt of linear shopping precincts along major corridors outside the walled city. Mirza Ismail Road alias MI Road has a glittering row of exclusive handicraft showrooms, curio shops, antiques, watches, textiles, electronics and internationally famous brands such as Pepe Jeans, Phillips, Lacoste, Titan Raymonds and host of Bank Braches and ATM’s . Other shopping areas of city viz. Raja Park, Adarsh Nagar, Tilak Nagar, Tonk Road, Malviya Nagar, Gopalpura by-pass which is primarily an area for car showrooms.

A recent study conducted by Chesterton Meghraj Property Consultants reveals that there are approximately 5,000 wholesale traders in Jaipur city. On an average, 3,500 new shops and commercial establishments are set up every year in Jaipur city alone and it is estimated that more than 75,000 people work in the existing 45,000 shops and commercial establishments in the city. Due to this increasing demand for shopping areas, there are visible vital changes taking place in the major shopping areas of Jaipur. Most of the shopping areas in the city have been developed by the utilisation of front setbacks of residential plots into commercial shops. This led to the concept of linear

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shopping roads in the city. The areas of New Colony, C-Scheme, Banni Park and abutting areas of these schemes also changed to commercial land use from residential to get more value from their respective lands.

Since the last decade, Jaipuris have witnessed development of a new dimensional retail trade in the city. The linear single storeyed retail shopping corridors of yesteryears are now being converted to multistoreyed commercial complexes. The people of Jaipur are also developing a habit of visiting shopping complexes and showrooms for all their day to day needs. The new concept of shopping at one place has generated a new wave in the retail trade of Jaipur.

An early step towards the concentrated and superior shopping in Jaipur was Saraogi Mansion commercial complex, developed in 1991 near Sanganer Gate. The success story of this complex led to the foundation of more number of commercial complexes in the city. In a span of one decade, MI road, the heartline of retail trade of Jaipur has become loaded with commercial complexes and plazas, be it Laxmi Plaza, Ganpati, Jaipur Tower or Anukampa. MI road, being the most expensive retail area of the city, offers a space at a rent of Rs 80 – 120 psft per month, depending upon the location. Compared to this a commercial space at Ganpati Plaza offers a rate of Rs 70 – 100 psft per month. The representative rentals in the city are as follows:

Rental rates for retail areas

Location Rates in Rs per sq ft per month Prime area Non prime area MI Road 120 75 Bhagwan Das Road 80 60 Banni Park 60 30 Tonk Road 40 20 Raja Park 70 25 Malviya Nagar 85 35 Lal Kothi 40 20 Gopalpur Bye Pass 30 15

The Out look and Performance

It is expected that in the future these commercial cum retail complexes will make a positive impact on the retail trade of the Jaipur city. A fine example is the Gaurav Towers, which has developed in Malviya Nagar and houses various international brands such as Shoppers stop, Mega Bowl, Planet Sports , Big Shoppers, Dominos, Mcdonalds, Planet – M etc. In addition

to this, six more commercial malls are in the process of development at various locations in the city, the main among them are Ganga Tower at M.I. Road, City Plaza at Banni Park, Vaibhav Tower at Vaishali, City Star at Central Spine and multiplex at Jawahar Circle. It is estimated that by May 2002, there will be around 650,000 sq. ft. of built up area ready for occupation.

Development agencies are also taking keen interest in these kind of landmark developments as this will check unauthorised and haphazard development in the city. In

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the recent past, Housing Board has auctioned 2-3 sites for commercial cum retail complexes in the newly developed Mansarover and Pratap Nagar areas.

Thus it seems that the concept of commercial cum retail complexes is at boom right now in the city but the future scenario of the Jaipur city will depend upon how much of this area is finally taken up by the retailers

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21. GUEST FEATURE – ‘INNER CITY REDEVELOPMENT: URBAN VILLAGES OF DELHI’ Realty Review-Sept- Oct, 2001 – edition

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INNER CITY REDEVELOPMENT: URBAN VILLAGES OF DELHI

As we continue from our last issue, we explore the real estate dynamics of Inner City redevelopment of a different nature – that of urban villages, which play a multi faceted role changing as cities grow and engulf them. There are a number of urban villages, which have been swamped by the spread of Delhi. They have grown symbiotically to assume a changing profile and role as they adapt their ancient structures to meet the new imposed needs.

These urban villages have become islands in the planned development and have assumed appropriate roles thrust on them by the pressures of economic activities on space and its pricing. Many have become residential reservoirs for the first time migrants and non-resident students. The turnover of tenants (residential families) is much higher in urban villages than other parts of the city. Some have adapted to the flowering of household industries while others have managed to grow uniquely. We study and compare two such urban villages which have grown very diversely but the real estate trends have played a major role in their growing up to assume the kind of activities they have now. We see Hauz Khas village and Shahpur Jat village in South Delhi as two examples where real estate dynamics have played a major part in the inner city redevelopment of a different nature.

HAUZ KHAS VILLAGE: As one drives on Aurobindo Marg, it is easy to miss out on an offshoot road adjacent to the Aurobindo market, where Hauz Khas village is located. The Deer Park and the Rose Garden on both sides flank this road, before culminating into the urban village known as the Hauz Khas Village. The ‘Lal Dora’ area of Hauz Khas presents a myriad of scenes, appealing to the eyes. It is prominent for its designer boutiques, specialty restaurants, furniture showrooms and handicrafts. Bina Ramani started this wave of designer boutiques in the village. She realised the true potential of the place when she set up a boutique named ‘Once Upon A Time’, for her artisans in the late 1980s. The green belt and the beautiful landscape of the Hauz Khas monument with the ‘Hauz I Alai’ reservoir formed a perfect backdrop for fashion shows. This drew in droves of the tourist population and set the ball rolling for more designers to set their base here. Suneet Verma, Ravi Bajaj, Rina Dhaka, Payal Jain and Rohit Bal featured in this category.

Apart from the scenic beauty of the place, another important factor that lured occupancy here was the low rentals. The rentals are one-third of those in conforming areas. An average size showroom, of approximately 500 square feet attracts rentals as low as Rs.20-60 per sq. ft. per month and Rs.15-25 per sq. ft. per month on the main road and the backlanes respectively. Most of the shops have a three-year lease agreement of rent. There are few shops, which have been transacted on an outright sales basis as well. At the time of moving in, there is only a bare shell structure with unplastered walls. The creative interiors like the mud plastered walls of ‘Ogaan’; a famous design boutique or the wooden flooring of ‘Expressionist’ is the brainchild of the occupants. Though the prime area falls under the MCD governance now, there are still examples of built structures defying the norms. When the urban villages came into being, which was much before independence, they did not fall under NDMC, MCD or DDA’s jurisdiction. This explains the innumerable shops dotting the place, even in the meandering inlanes. Even

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on the main street leading to the Hauz Khas monument, one can see residential village type development on the second floor, with the posh showrooms on the lower floors.

Inspite of the elite clientele that throng Hauz Khas village regularly, there is a mixed reaction of the occupants when asked if they were satisfied being there. While one of the tenants points out at the unidirectional flow of traffic leading to vehicular parking problems, another complains about the residents in the area creating an ugly scene sometimes leading to rifts. Many corporates have moved out of this place and relocated elsewhere as they felt that the deteriorating infrastructure acted as a handicap.

SHAHPUR JAT VILLAGE: Keeping in tune with such conditions is another ‘Lal Dora’ area close to the Hauz Khas village. Shahpur Jat lies adjacent to the Asian Games Village. This area came up about 500 years ago in the ruins of Tughlaq’s Siri Fort. The nomenclature suggests the predominance of the ‘Jat’ community in this village, which indeed is factual. Shahpur Jat came ‘alive’ with its corporate image when the Asian Games Village developed in 1982.

Though one cannot see any remnants of the farmlands they occupied, the age-old occupation of selling milk and milk products still thrives in the area. Hence, the sight of buffaloes, men sitting on cots and playing cards, houses lying uncomfortably close to each other tells the story of the past breathing alive in the present. There have been certain changes though, over the past four or five years. Since the area does not come under any lawful body’s governance, the villagers have leased out a good amount of it to corporates. This way, they earn huge rentals. The rentals are as low as Rs8-10 per square feet per month in residential areas, depending on the floor it is on. The main road linking August Kranti Marg to this village has many offices. The rentals here are higher than in the inner bylanes attracting upto Rs30 per square feet per month. The infrastructure like electricity and water supply is as good as anywhere else in the posh South Delhi region. Hence, corporates do not hesitate to relocate here. ‘Dastakar’, the oldest corporate inhabitant came about six years back. The other firms, which came up soon afterwards, were Tarini, Essentia, Poetry in Pottery, The Bag Garage, Shiva Carpets to name a few. Famous software development firms like Euro Software and MCS are located in close vicinity to small garment–stitching units that are based here. The local villagers have many craftsmen who help to satisfy the demand of customers.

The real estate dynamics of both these villages has resulted in a diverse nature of growth. Hauz Khas village has emerged to be a more pleasant and unique experience comparatively. We can see that Shahpur Jat, Hauz Khas village, Kotla Mubarakpur, Mahipalpur and other such urban villages of Delhi form an important aspect of the inner cities. It is the low rentals in these areas that make them more affordable than others. The Delhi Master Plan has not yet tapped the true potential of the urban villages. The absence of regulatory bodies here is encashed upon the villagers by leasing out spaces at rates suitable to them. These areas attract activities that are price and location sensitive, thereby helping in coping with the extra demand of the city.

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22. GUEST FEATURE – ‘INNER CITY REDEVELOPMENT Realty Review- August- Sept, 2001 – edition

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GUEST FEATURE – ‘INNER CITY REDEVELOPMENT

The growth of cities can be compared to the growth of living organisms. It starts with the nucleus or the core of the city, which is the hub of economic activity (trade and commerce). Various support functions grow as various support layers around it. Over time, each of these layers keep adding up, each reflecting a certain type of growth. This type of growth or a phase of development over time is characterized by the socio-political and economic systems prevalent during this time.

With time, new centres of growth emerge. The old “nuclei” die out and growth patterns get restructured. These are characterized by a flight of capital from these cities. Even activities, once thriving there relocate to new areas and with them go the jobs. The area as such sees such companies moving out and the vacancy rates increase. The real estate prices in such areas go down as a result. The flight from business from such areas can be because of the following:

• The concentration of such activities at new happening places.

• The urban fabric of the inner city not being flexible enough to support the new kind of space demands of the businesses as these change over time.

• The urban infrastructure and transport connectivity getting over stretched.

The successful businesses that can bear the cost of relocation move out. A new wave of activities come in and fills out the places that have become vacant. These can be the kind of economic activities which:

• Use the location to their advantage (Business location decision)

• Have the criterion of getting cheaper real estate. (as the rentals are low)

• Can grow or flourish in the kind of byelaws present or not present there. So, we see that activities which would have been classified as non-conforming would come up here because of a different set of byelaws governing the old core. The case in point to this is of urban villages, which are engulfed in the growth of the city. They attract a particular kind of economic activity that needs these low real estate prices to survive. They also become places for the first wave immigrants to the city. The kind of byelaws prevalent there also permits subdivision to a large extent and resulting in mushrooming of large number of tenements. These attract first time immigrants, students and families because of low rentals and poor quality of life. Then, there is also a case of old factories and mills that got engulfed into the swirling growth of the city. They get surrounded by incompatible landuses, and they too become points of conflict in the development process. It is then that these large land assets get recycled and are brought into appropriate use. We see a lot of that happening in Mumbai at the moment where sick cloth mills are being recycled to create valuable assets for the city. These mills are making way for replenishing the housing stock, setting up of city level facilities like shopping malls and entertainment centres. The stage of recycling of assets also increases the real estate values of the surrounding areas.

From the real estate perspective, Inner Cities can be categorized as:

• Urban villages caught in the webs of city’s growth

• Large assets like mills, factories, university areas etc. which over time get engulfed in the city’s growth

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• Large land holdings belonging to the government like Railway land, Cantonment etc.

The strategies for revitalization of these are case specific for e.g. in urban village redevelopment, a very prominent case is that of the Hauz Khas in New Delhi village where it was the locational advantage of that place - in proximity to the Hauz Khas monuments, City forest, Deer Park and rich residential areas which was significant for its success. It was the coming up of a catalyst - a boutique, that started it all with many of them cropping up over time and creating a shopping ambience never seen before in Delhi. The result was that the real estate values in the village increased. Villagers started earning huge rentals. It was a transformation of a derelict area. There are other examples too in Delhi like Shahpur Jat, Kotla Mubarakpur, Mohammedpur where small offices and household industries have cropped up.

In Gurgaon, the selling of the closed Jwala textiles (14 acres) to Hughes Software who are now revitalize it by having their software centre is a case in point. It can provide the much needed city level assets which otherwise may not be possible.

There are such similar vacant lands under the Railways, State Transport Corporations, in the Cantonment area etc., which if used or developed judiciously can add to the much-needed housing stock to our bursting metros. Not only will it add stock to the R.E. market, but also make it more affordable for the common man.

The government/land agency ought to act as a facilitator for this and enable the owners of such properties to make their contributions to the society. The owners should be allowed to make the profit and the citizens too should gain. It would go a long way in creation of healthy real estate markets in our cities as well as meeting the space demands of the city. Real estate consultants can play a major role in this for recycling dormant real estate assets and create value for society

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23. RETAILING - TOWING INTERNATIONAL NORMS OR LOCAL REALITIES?

Realty Review- July- August, 2001 – edition

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RETAILING - TOWING INTERNATIONAL NORMS OR LOCAL REALITIES?

The word "Retail" has generated some serious interest among the property community in India over the last 18 months or so. One of the questions which is increasingly being raised is whether Indian retailing will follow the long established international norms or whether it will evolve around consumer ground realities. My guess is that it will be a combination of both. There is no doubt that at-least in terms of the scale and format, Indian retailing will closely follow global standards, which can be broadly classified as:

1. High Street - prime shopping units on main retail thoroughfares in locations such as Connaught Place in Delhi and Kemps Corner in Mumbai

2. Out of Town (i.e. destination) - typically speciality shopping units in suburbs e.g. department stores

3. Shopping Centres or Malls either in city centres or suburbs

The growing integration of the world economy is leading retailers to focus on their core competencies and follow simple objectives in order to be competitive and profitable. In the case of the most successful retailers, the broad objectives can be classified as follows:

1. Continuous brand building and brand recognition (the coffee chain

Barista is a successful example of this tried and tested formula)

2. Providing a value for money product

3. Providing a unique consumer experience, not experienced before and which will be increasingly demanded (shopping centres, department stores, food and shopping combined etc)

4. Allowing consumers to participate in a global experience, whilst retaining a distinct local flavour (e.g. McDonald’s with its global best practices and locally customized products)

5. Ensuring a consistent long term cash flow for shareholders and thereby ensuring the success of the business

For Indian retailers to succeed, qualifying for all of the above is a prerequisite. As of now, one only sees a handful of retailers, who have been able to achieve all the objectives.

Most importantly, Indian retailers have to be able to crack the code of definition of the "Great Indian Middle Class". Whilst there is no doubt that the middle class exists an d offers a massive opportunity, at the same, it is critical that the segment is classified in order to understand the correct nature of the target market. This is important because the Indian consumer is extremely price sensitive, brand conscious, sophisti cated and willing to try something new, but on their own terms. Too many consumer companies in India and abroad have failed because they have misread the market and time will tell, who will succeed. We believe that the winners in the retail race will be Indian and foreign joint venture companies that take a long term view and deliver a cost effective unique consumer experience, much beyond the initial 24 month honeymoon period that every retailer has with its customers. The initial first movers advantage from “product hungry” consumers will reduce with competition and only the companies with a sharp focus, brand and product will survive.

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Moreover, retailers in India need to brace themselves from the impact of the global slowdown underway in the UK and USA, as the first crunch of any real slowdown will be felt in the retail sector. Only retailers, who are able to combine international best practices along with a distinct local flavour, can hope to maintain a consistent flow of consumers.

Over a period of time, with the fancy of the retail boom catching the imagination of various developers in India, I expect that the scale of choice in terms of new retail malls would increase considerably for retailers.

However, there are a couple of notes of caution that retailers need to keep in mind before committing to any scheme.

For one, retailers should be very careful of choosing the mall to locate in and should look at-least at five key issues -

1. Location - should be in a prime retail location with adequate footfall and of car parking.

2. Tenant Mix - retailers should allow for a wide range of complementary occupiers.

3. Design - should be consumer friendly and augment circulation within the mall.

4. Management - to be of the highest quality both within the mall and outside.

5. Pricing - should allow for flexibility of operation and should not render the retailer to be un-viable. Pricing models based on turnover rents are a good way of structuring retail rents, especially in untested locations and keeps the landlord interested, as he will share in the success of the tenant.

Performance of retail property is inextricably linked to the ability of consistently attracting consumers and probably more importantly of ensuring that they spend money. This basic principle is what would ensure profits both of retail operators and developers. Whilst there are a host of factors apart from the above that are important whilst choosing a good retail option, the five factors stated above can help as rules of thumb to evaluate winning locations amongst a host of developments that are rapidly being developed in India.

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