Real estate news on Kolkata-based Forum Projects eyes distressed malls in Mumbai

Builders/ Developers, Commercial Properties, Malls/Retail, Kolkata, Forum Projects, Jones Lang LaSalle India (JLL India)
Posted on Aug 11, 2015

Forum Projects currently owns two malls in Kolkata and are building six more in West Bengal, Jharkhand and Orissa.

Mumbai: Malls across India are in distress with e-commerce catching up fast. Mumbai is no different. But Forum Projects, a Kolkata-based property developer, sees this as an opportunity to buy such sick malls at lower prices and turn them around.

Forum Projects, which claims to have opened Kolkatas first shopping mall in 2003, said it has identified a couple of sick assets in Bhandup, a suburb in central Mumbai. The size of the deal could range between Rs.400 crore and Rs.500 crore, said Rahul Saraf, managing director, Forum Projects.

The property developer owns two malls in Kolkata and are building six more in West Bengal, Jharkhand and Orissa. The total area under construction is estimated to be over 3.5 million square feet with investment of around Rs.2,000 crore. Most of them are expected to be operational in the next two-three years period, said Saraf.

The company is now planning to enter the western region of the country through the acquisition. “We are looking for distressed malls particularly in the western zone. In Mumbai, we are evaluating one mall which is lying sick and is available on sale. We are evaluating whether it can be taken over by us,” said Saraf.

He declined to give the names of the malls due to confidentiality issue. Real estate consultant Jones Lang Lasalle India (JLL) is believed to be property advisor for the deal. However, JLL has not confirmed the development.

The company had recently entered into the Mumbai real estate market through a joint venture with Omkar Realtors. Both the companies are jointly developing a 2.5 million square feet residential project in Bandra-Kurla Complex (BKC), of which phase one is likely to be completed by next year.

“There is a big opportunity for experienced developers like us to acquire sick malls. They are prized assets which can be available at much lower values. One can use their expertise to rectify the mistakes and put them back into the market,” Saraf said.

According to JLL India estimate, only about 20% of the total 255 malls across the top seven cities in the country are doing well with low vacancy rate and high footfalls. In Mumbai, few of the malls in the suburbs have either shut down in the recent past or facing an uncertain future.

For instance, Bhandup has two malls—Housing Development and Infrastructure Ltds Dreams Mall and Neptunes Magnet Mall. In the nearby vicinity of Mulund is Nirmal Lifestyle. All of these are on the verge of shutting down, according to experts.

“There is definitely a demand and supply mismatch in the commercial retail space. There is demand for good quality malls in Mumbai and there is definitely a big opportunity for mall developers like Forum which understands the business well,” said Pankaj Renjhen, managing director - retail Services, JLL India.

He said good quality mall assets are available in Mumbai. However, most of them have failed due to poor management. According to experts, malls are not designed properly, store sizes do not match to the requirement of the retailers and most of them are not managed by professionals who understand the retail business.

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