New Delhi: Future Group, the parent company of India’s largest listed retailer Pantaloon Retail (India) Ltd, and a local real-estate firm will invest around Rs850 crore to build an entertainment-cum-commercial enclave in Pune to tap the growth in the country’s booming commercial space and retail sectors.
The 2.8 million sq. ft project called Market City will have malls, a 300 to 350-room business hotel, entertainment space and offices and is expected to be completed in phases by mid 2010.
Future’s real-estate private equity fund, Kshitij Investment Advisory Co., and Pune-based developer City Group will invest Rs180 crore each with the remaining Rs490 crore being funded through long-term debt from banks and financial institutions, said Shishir Baijal, chief executive of Kshitij Investment.
The project will be designed by Walker Architects of New Zealand and will be funded through a debt-to-equity ratio of 1.5:1, he added.
Baijal said the company has so far committed around $230 million (Rs943 crore) to various real-estate projects in India out of its corpus (spanning two private equity funds) of $430 million.
This will be the seventh Market City project from Kshitij after six others in Mumbai, Bangalore, Chennai and Hyderabad with each project costing between Rs500 crore and Rs1,200 crore including the cost of the land. The Chennai project will cost only Rs500 crore as it is smaller compared to the Pune Market City and land prices were cheaper in the southern city when the company purchased it.
In India, the organized retail business is taking off at a time when real-estate prices are at historical highs. The fight for space is forcing retailers to build their own banks of commercial space.
The 30-acre Market City is coming up within the 350-acre residential project City Group is building in the Pune suburb of Hadapsa.
Separately, Kshitij is still in talks with Wall Street titan, Lehman Brothers, for a fund to develop a chain of budget hotels in India, Baijal said.