DLF to invest Rs 2,000 cr to build two shopping malls in Gurugram, Goa

Realty major DLF will invest around Rs 2,000 crore to construct two new shopping malls in Gurugram and Goa, as it sees huge growth potential in organised retail with opening up of the economy after significant reduction in COVID-19 cases.

In an interview with PTI, Sriram Khattar, Managing Director, DLF Rental Business, sounded bullish on India's organised retail sector which was affected very badly in the last two years due to the pandemic.

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Khattar said the DLF is expanding its retail real estate portfolio, and will develop two new shopping malls, including 'Mall of India' Gurgaon and four neighbourhood shopping centres.

At present, DLF has a retail footprint of 42 lakh square feet comprising eight properties, including malls and shopping centres, mainly across Delhi-NCR.

"We have started the construction of a premium mall in Goa of about 5.75 lakh square feet. It will be the best mall of Goa to the standards which our malls are," Khattar told PTI.

Asked about investment, he said it would be around Rs 300-350 crore over the next two years. "We are also in the advance stage of planning for our 'Mall of India' Gurgaon comprising 2.5 million (25 lakh) square feet area," he said.

The construction is expected to start by the end of this year.

"So the architects have started doing the designing. We hope to complete it over the next six months or so. Since it's a very large mall, the planning takes more time," Khattar said.

On project cost of 'Mall of India' Gurgaon, he said it would be around Rs 1,500-1,600 crore, excluding land cost. Asked how different this project would be from the two million square feet

Mall of India-Noida, he said: "With each experience, we have tried to improve upon ourselves. Therefore, from our learning from Noida mall, this will be that much better."

On viability of 'Mall of India' Gurgaon project considering the presence of Ambience Mall nearby, Khattar said the competition helps in growing the market.

"Given our credibility with the retailers and trust they repose on us, we do not see an issue in terms of getting the best brands in the country and the world to this mall," he asserted.

That apart, Khattar said the company has started a concept of high-street shopping centres to cater to the requirements of people living around.

"We have started construction of one in DLF-phase 5, Gurgaon, which we are calling Summit Plaza. We are likely to start one in Moti Nagar, Delhi near our DLF-Midtown project. We are also planning one or two more of these," he said.

The high-street shopping centre in DLF phase-5, Gurugram will be of around 3.8 lakh square feet, while the one in Delhi of 2.2 lakh square feet.

Asked about the outlook for retail business particularly after the onslaught it faced during the past two years because of nationwide lockdown and local restrictions, Khattar said: "The pre-COVID levels are coming back very quickly. Gyms, cinemas and other entertainment formats have opened up completely."

He noted that the organised retail in India is still unpenetrated.

"Given the economic growth that takes place, more and more people move from disorganised to organised retail shopping. We see a very bright future for organised retail and therefore malls as we go forward," Khattar said.

He said the company continuously focus on improving the shopping experience of people visiting its properties.

"If we continue to do that, we believe that the markets are pretty good for us."

On the new trend, he said the international brands have performed well, in fact better than the pre-COVID levels.

When asked about the losses DLF suffered in its malls business in the last two years, Khattar said: "Instead of quantifying losses, one has to look at this emotionally."

During the COVID times, he said, the company's emphasis was never on the profit and loss or on rentals recovery.

"Our emphasis was to hold hands with our retailers, typically who have 1-10 stores and not having strong balance sheets, tell them that we stand by them during this difficult times.

"We believe that it was an investment well made. These retailers are now with us, and will contribute to be our retail partner as we grow our retail business," Khattar said.

On plans to enter new cities for development of malls, Khattar said the company would explore such possibilities. The company is developing some value added retail component in its upcoming IT park DLF Downtown, Chennai.

Khattar informed that the retail portfolio contributes around 18 per cent to its total rental income and 12-13 per cent to its total annuity portfolio.

On rental income from retail assets in the next fiscal, Khattar said: "We are looking next fiscal year with cautious optimism."

Still, he said, the rental income would grow in the next fiscal at a rate higher than the current industry average.

Around 90-93 per cent of the company's retail portfolio is under the DLF Cyber City Developers Ltd (DCCDL), a joint venture between DLF and Singapore sovereign wealth fund GIC.

DLF has developed around 153 real estate projects and an area of approximately 331 million square feet.

The group has 215 million square feet of development potential across the residential and commercial segment.

The group has an annuity portfolio of over 35 million square feet, of which 33 million square feet is LEED Platinum certified by US Green Building Council. The annual rental income is around Rs 3,500 crore.