New Delhi: The country’s largest developer by market value, DLF Ltd, has put its ambitious Mall of India project back on the drawing board after cash-crunch and falling rentals forced the company to shelve the 4.5 million sq. ft project in Gurgaon, on the outskirts of New Delhi.
Mall of India was proposed to be the biggest mall in the country.
DLF is now reworking the project dynamics. The developer is exploring options such as reducing the size of the mall or building a hotel and office space besides the mall.
Weakening demand: DLF’s City Center Mall in Gurgaon. Four of the developer’s malls are expected to be ready before Diwali in October. Harikrishna Katragadda / Mint
“Construction is on at the project, but at a very slow pace,” a DLF official said on condition of anonymity. “It is now back at the drawing-board stage and we are looking at many options for the project. We need to utilize the land somehow.”
Excavation was on at the site when DLF decided to defer the project.
The developer is also exploring private equity investment for the project. Mall of India was to be built at a cost of Rs1,500-2,000 crore.
“Earlier, we could have completed the mall project with our internal accruals but now we might have to look at funding from private equity investors,” the official said.
Weakening demand for retail space is prompting mall developers to stall projects. In its third quarter analyst presentation, DLF had said that the company has stalled construction work on 16 million sq. ft of office and retail mall space out of the 62 million sq. ft of space under construction till project financing gets arranged.
Currently, DLF has eight operational malls in New Delhi and its suburbs. Four malls that were under construction in New Delhi, its suburbs and Mumbai are expected to be ready before Diwali in October, Arvind Nair, managing director, DLF Retail Developers Ltd, said on the sidelines of a conference on Tuesday. Rentals in the new malls will be less, Nair said. Mall rentals have fallen by 15-20% in New Delhi and its suburbs of Gurgaon and Noida.
DLF is, however, not renegotiating rentals with its tenants in its existing malls, Nair said. “We have not resorted to any renegotiations in our operational properties.
Terming footfalls as normal, Nair said developers are focussed on prioritising to avoid the slowdown. “Therefore, we have put our focus mostly on the metro cities,” he added.