Co has already initiated talks with PE funds for move
Mumbai: Real estate developer Omkar Realtors & Developers is looking to monetise its upcoming over 1-million-sq-ft retail mall in the suburb of Andheri in Mumbai for ₹2,000 crore, said two persons familiar with the development.
The mall is part of a larger integrated mixed redevelopment project spread over 65 acres adjacent to Mumbai’s western express highway. The total proposed development will be around 100 million sq ft, of which 60% will be residential development and the rest will be for mixed use.
“The entire project with a range of collaborations with leading names in hospitality for a five-star hotel and services business is being financed with a mix of internal accruals and external funding,” said one of the persons mentioned above. He said for the proposed monetisation of the retail mall, the company has already initiated talks with private equity funds that own and operate premium retail malls in key cities of the country.
The project has begun construction in January this year and is expected to be completed in 4.5 years in multiple phases for its residential and commercial inventory. The company is also planning to develop a five-star hotel in this project. While the deal for the retail mall is expected to be concluded over the next two months, the developer is also looking to bring in financial closure for subsequent phases of the project soon after this.
Omkar Realtors’ spokesperson declined to comment on the story.
As part of the proposed layout, the project will deliver around 9,000 free sale premium residential apartments while the five-star hospitality project will be spread over a 2.5 lakh sq ft area.
While the company has brought in Thailand-based GOCO Hospitality for its club facilities, the management is in advanced talks with one of the leading international hotel chains for managing the hotel.
Leasing activity in retail real estate has been on the rise and several prominent malls are witnessing robust inquiries for more space from leading brands. In the absence of larger supply of retail space, demand for space is rising as existing occupiers are seeking larger spaces.
Private equity investors have also revived their interest in retail real estate after a few years of reduced focus as part of a strategy to diversify their investment portfolios at a time when consumption levels are on the rise.
Global private funds, including Blackstone Group, Canada Pension Plan Investment Board (CPPIB), APG Asset Management, Xander Group and GIC, have started investing in the retail sector to diversify their investment portfolios in the country.
In the latest quarter ended June, private equity transactions worth ₹1,700 crore aimed at retail assets were concluded by the Canada Pension Plan Investment Board (CPPIB) and Xander Group. Private equity firms had invested more than $724 million in Indian retail real estate in the first nine months of 2017 alone against $846 million invested in 2015 and 2016, showed recent data.
This includes all types of investments, from platform and entity-level deals to acquiring stakes in leading malls in cities.