The Wadia Group is entering into a 50:50 joint venture (JV) with Simon Global Ltd, a subsidiary of the US-based real estate company Simon Property Group Inc. (SPG), to develop luxury shopping centres in India, according to a person familiar with the development who did not wish to be identified because an announcement hasn’t yet been made.
The Wadia Group is looking at developing 8-10 luxury malls across India in the next 10 years. These shopping centres would house international luxury brands, restaurants and entertainment zones among others.
SPG has a market capitalization of $56 billion (Rs2.3 trillion) and owns or has an interest in 323 properties in the US with an aggregate leasable space of 244 million sq. ft.
A Wadia Group spokesperson declined to comment on the development, saying, “The company policy is not to comment on rumour or speculation. As you will appreciate, our business plans and discussions are confidential.” SPG officials were contacted and an email was sent to the firm, but it did not respond to queries.
Although the exact contours of the JV could not be known, industry experts say the Wadia Group may offer the land bank required for the high-end malls as well as be the local liaison for licences and government approvals. Simon Global is likely to bring in expertise in planning, development and managing these malls. It could also bring in premium and luxury retailers into the country since it has been dealing with such retailers in its premium malls in the US.
SPG owns or holds an interest in 286 properties in the US, including 171 regional malls.
The Wadia Group plans to acquire partners or license a slew of domestic and international brands in various categories—from consumer durables to apparel—to see in its different retail formats. “The group is developing 4.3 million sq. ft land in central Mumbai,” some of which will be part of its big retail foray, and is “prepared to commit adequate resources from the group’s side once the studies are over,” Ness Wadia, joint managing director of Bombay Dyeing, had said earlier in March.
“Most old corporate houses such as the Wadia Group are going for value creation by adding value in their properties and it should help them in the long run,” said Shubhranshu Pani, president, retail services, Jones Lang LaSalle Meghraj, a real estate advisory.
According to a 2006 study by Merrill Lynch and Capgemini, India is home to more than 83,000 people whose net worth is more than a million dollars and the country’s luxury market is estimated to be growing at 20% a year.
International luxury retailers, including Louis Vuitton, Moet Henessey, Chanel, Bulgari, Valentino and Fendi, have set up shop in India. In the absence of appropriate retail space, many sell out of outlets in five-star hotels.
Indian laws allow up to 51% foreign investment in single-brand retail.
“Beyond metros such as Mumbai and Delhi, there is not really a need for more than one luxury mall in each city,” said consultancy firm Technopak’s chief operating officer Harminder Sahni. He added that “too much” was happening “too early” as far as the development of these malls was concerned.
Many Indian developers have plans for luxury malls. Real estate firm DLF Ltd is set to open a luxury mall, branded Emporio, in New Delhi. Pantaloon Retail, India’s largest listed retailer, may also convert Crossroads, a Mumbai mall it recently acquired, into a luxury mall.