New Delhi: India’s second largest listed real estate developer, Unitech Ltd, plans to expand from two to 48 malls and shopping centres over the next six years at an estimated investment of Rs20,000 crore. The company plans to use internal accruals and raise debt to fund its expansion in retail space, according to Sanjay Chandra, managing director, Unitech.

Trendy move: Managing director Sanjay Chandra says Unitech will move to tier II and III cities.

Unitech plans to develop more than 60 million sq. ft of retail space over six years. In the first phase, Unitech will develop 24 malls covering more than 20 million sq. ft in cities such as Mumbai, Kolkata, Chennai, Bangalore, Hyderabad and New Delhi’s suburbs, and smaller cities such as Chandigarh, Lucknow and Goa. The average size of the malls in the metro cities will be around 1 million sq. ft.

“Initially, the company will target metro cities and important state capitals for its retail expansion, but at a later stage, we will gradually move on to tier II and tier III cities," Chandra said. Tier II and III are smaller cities.

Out of the 24 malls and shopping centres planned in the first phase, 18 are already on the design table and construction work has started on six malls, the firm said in an emailed statement. Unitech is using its existing land for the development of 18 malls and it is in negotiations to purchase the remaining.

Real estate developers have been aggressively expanding their retail business as developers expect the demand for retail space to increase with the proposed entry of large format retailers such as Wal-Mart Stores Inc., Carrefour SA and Tesco Plc. in the country. The world’s largest retailer, Wal-Mart, has already tied up with Bharti Enterprises for its retail venture in the Indian market.

Much of the mall development in the country is happening in the metro cities. According to an Ernst and Young (E&Y) report, commercial retail, including malls, multiplexes and shops, saw a significant supply in 2006 out of which an estimated 90% was in the top 7 metro cities such as New Delhi and Mumbai.

Unitech plans to follow its existing business model of mix-use developments, implying it will be a combination of retail and leisure or hospitality space for all its malls to bring in more visitors in the malls and to ensure a long-term revenue stream for the company, the statement said.

Both the existing malls of Unitech—the Great India Place and Metro Walk—have amusement parks. Organized large-retail format is becoming popular over the traditional small-retail format in the metro cities. But this trend is yet to pick up in smaller cities, the E&Y report said.

Unitech shares rose Rs38.55, or 9.82%, to close on Thursday at Rs431.15 on the Bombay Stock Exchange.