News: Indian real estate mix 'n match
(EH 07/04/2006) Chennai - While mixed-use development has proved to be a successful concept abroad, it is still at a nascent stage in India. Bhavika Jhaveri explores the current scenario.
While it's all about creating footfalls for developers, many hotels seem apprehensive about getting into mixed-use development - having retail, commercial and hotel facilities under one roof. The term, mixed-use, has various forms; permutations/combinations of malls with a hotel, or a convention centre with a hotel, multiplex and so on.
It is a well-documented fact that India is witnessing a hospitality boom. According to a forecast by HVS International, the consequential surge in demand will mean adding another 1,00,000 to 1,25,000 rooms in the next five to seven years. An important factor that will drive this demand is mixed-use development. However, most such projects in India currently don't have a hotel. But considering the demand for mid-market hotels, presence of the hotel component would prove beneficial. A recent example would be the Hyderabad International Convention Centre (HICC) developed by Emaar Properties, billed to be the largest convention centre in India. HICC offers event organisers 2,91,000 square feet of primary meeting space with a capacity to seat 5,000 delegates and 2,50,000 square feet of pre-function areas. Anshuman Magazine, MD of CB Richard Ellis, real estate consultants, reckons that the concept has a lot to offer and is slated to be a future trend. "Mixed-use normally means residential, office and also a hotel. A lot of new developments are coming up in the periphery of Mumbai and having an integrated development enables the developer to maximise returns. In future, we should see more such developments," he predicts.
Courting plazas
In Chennai, the buzzword seems to be integrated development with more than five malls slated to come up in the city; hotels, food courts are jostling for space alongside multiplexes and corporate offices. Though integrated development here began more than two decades ago with corporates setting shop in Alsa Mall and Spencer's Plaza, the oldest malls in the city, the concept has evolved with food courts, gaming centres and restaurants cashing in on the shoppers frequenting the place. The new Ampa Centre One, for instance, is planning a 20-room boutique hotel in its mall. Ampa Palaniappan, MD of Ampa Centre One, firmly believes that setting up restaurants, hotels and food courts in a mall are more financially viable. "The costs are minimised when restaurants, food courts and other entertainment centres are set up in a mall," he opines.
Deepak Banerjee, director of DLF Retail Developers, a real estate company in India, feels that there is a large retail development taking place in India. "A mixed-use development project can become a destination in itself for families. For instance, in Minneapolis people go for shopping and spend the weekend at the hotel it houses. Indian middle-class families seem to be going the same way," he adds. DLF is planning two new projects called South Court and The Courtyard that will have hotels with 60 and 100 rooms each.
The upcoming 3,00,000 square feet Chennai City Center will have retailers, multiplexes and offices in it. In fact, business centres are going to occupy about one lakh square feet of space leaving the rest for retail shops and multiplexes. A Shankar, manager (Consulting Services) at Trammell Crow Meghraj Property Consultants Pvt Ltd, points out that setting up offices in a mall is 50 per cent cheaper than standalone because of lower construction costs. "Integrated development is catching on as a trend and we are doing our part to promote this concept. Now we need to have convention centres and service apartments, even pubs, as a part of it," he observes. He adds that the presence of offices increases footfall in malls by at least 20 per cent. But while costs may be cheaper for offices, there is a fear that production levels might plummet due to the presence of large public thronging the place.
Mumbai is not too far with Grand Hyatt, Mumbai setting up its shopping plaza spread across 1,00,000 square feet comprising two levels around a central atrium. According to Nawabzada Omer Bin Jung, managing director of Prestige Leisure Resorts Pvt Ltd, "Mixed-use development started recently and it has to be seen as to how long it can sustain its success. A dedicated hotel or a mall offers a different experience and we have to wait and see the turn of trends. But otherwise, this format benefits the growth of a particular location or city. Currently, the retail as well as the hospitality sector is flourishing and the yield of a hotel on per square feet return increases if retail is incorporated. Retail is a premium at the lower level while the hotel is a premium on a higher level and the handshake is working well for now."
Permutate and combine
According to KnightFrank India, a consultancy firm, the concept is not yet a trend but developers have been exploring the idea. Akshay Kulkarni, head of its hospitality division, says, "Having a branded retail outlet and branded accommodation is a different ball game. If I have 1,000 square feet of land, I can build a hotel and get double FSI. If I build a mall I will get regular FSI but regular returns. So if you use that space to build a hotel, it reduces the cost of land. With a five-star accommodation, the mall is likely to create less footfalls, with a budget hotel the retail component will increase because it allows more footfalls." While there are few hotels who have signed up with mall developers, Amitabh Devendra, national head, (Hospitality & Leisure Services), Chesterton Meghraj points out that balanced space in a three- to four-storeyed mall should be utilised productively. Building a hotel is viable for a developer but for a hotelier it is about the price. "There is a fair amount of scope in mixed-use development. The problem is that many hoteliers haven't come to terms with leasing out their hotels or the unutilised space. It is a question of acceptability," Devendra continues. "On one hand it makes economic sense to the developers while on the other, it can prove profitable for hoteliers only if the lease is not high."
In any case, there are more properties coming up in Delhi beyond Gurgaon and in Mumbai towards Thane, Malad, Navi Mumbai and even Pune (the Ruia Group is building an International Convention Center in Pune). The Reliance Group is also planning to set up a convention centre at the Bandra-Kurla Complex in Mumbai. Evidently, budget hotels will do well in cashing in on the opportunity that this offers. Besides, the associated value from a mixed-use development project is bound to increase with the presence of a hotel component.
While it's all about creating footfalls for developers, many hotels seem apprehensive about getting into mixed-use development - having retail, commercial and hotel facilities under one roof. The term, mixed-use, has various forms; permutations/combinations of malls with a hotel, or a convention centre with a hotel, multiplex and so on.
It is a well-documented fact that India is witnessing a hospitality boom. According to a forecast by HVS International, the consequential surge in demand will mean adding another 1,00,000 to 1,25,000 rooms in the next five to seven years. An important factor that will drive this demand is mixed-use development. However, most such projects in India currently don't have a hotel. But considering the demand for mid-market hotels, presence of the hotel component would prove beneficial. A recent example would be the Hyderabad International Convention Centre (HICC) developed by Emaar Properties, billed to be the largest convention centre in India. HICC offers event organisers 2,91,000 square feet of primary meeting space with a capacity to seat 5,000 delegates and 2,50,000 square feet of pre-function areas. Anshuman Magazine, MD of CB Richard Ellis, real estate consultants, reckons that the concept has a lot to offer and is slated to be a future trend. "Mixed-use normally means residential, office and also a hotel. A lot of new developments are coming up in the periphery of Mumbai and having an integrated development enables the developer to maximise returns. In future, we should see more such developments," he predicts.
Courting plazas
In Chennai, the buzzword seems to be integrated development with more than five malls slated to come up in the city; hotels, food courts are jostling for space alongside multiplexes and corporate offices. Though integrated development here began more than two decades ago with corporates setting shop in Alsa Mall and Spencer's Plaza, the oldest malls in the city, the concept has evolved with food courts, gaming centres and restaurants cashing in on the shoppers frequenting the place. The new Ampa Centre One, for instance, is planning a 20-room boutique hotel in its mall. Ampa Palaniappan, MD of Ampa Centre One, firmly believes that setting up restaurants, hotels and food courts in a mall are more financially viable. "The costs are minimised when restaurants, food courts and other entertainment centres are set up in a mall," he opines.
Deepak Banerjee, director of DLF Retail Developers, a real estate company in India, feels that there is a large retail development taking place in India. "A mixed-use development project can become a destination in itself for families. For instance, in Minneapolis people go for shopping and spend the weekend at the hotel it houses. Indian middle-class families seem to be going the same way," he adds. DLF is planning two new projects called South Court and The Courtyard that will have hotels with 60 and 100 rooms each.
The upcoming 3,00,000 square feet Chennai City Center will have retailers, multiplexes and offices in it. In fact, business centres are going to occupy about one lakh square feet of space leaving the rest for retail shops and multiplexes. A Shankar, manager (Consulting Services) at Trammell Crow Meghraj Property Consultants Pvt Ltd, points out that setting up offices in a mall is 50 per cent cheaper than standalone because of lower construction costs. "Integrated development is catching on as a trend and we are doing our part to promote this concept. Now we need to have convention centres and service apartments, even pubs, as a part of it," he observes. He adds that the presence of offices increases footfall in malls by at least 20 per cent. But while costs may be cheaper for offices, there is a fear that production levels might plummet due to the presence of large public thronging the place.
Mumbai is not too far with Grand Hyatt, Mumbai setting up its shopping plaza spread across 1,00,000 square feet comprising two levels around a central atrium. According to Nawabzada Omer Bin Jung, managing director of Prestige Leisure Resorts Pvt Ltd, "Mixed-use development started recently and it has to be seen as to how long it can sustain its success. A dedicated hotel or a mall offers a different experience and we have to wait and see the turn of trends. But otherwise, this format benefits the growth of a particular location or city. Currently, the retail as well as the hospitality sector is flourishing and the yield of a hotel on per square feet return increases if retail is incorporated. Retail is a premium at the lower level while the hotel is a premium on a higher level and the handshake is working well for now."
Permutate and combine
According to KnightFrank India, a consultancy firm, the concept is not yet a trend but developers have been exploring the idea. Akshay Kulkarni, head of its hospitality division, says, "Having a branded retail outlet and branded accommodation is a different ball game. If I have 1,000 square feet of land, I can build a hotel and get double FSI. If I build a mall I will get regular FSI but regular returns. So if you use that space to build a hotel, it reduces the cost of land. With a five-star accommodation, the mall is likely to create less footfalls, with a budget hotel the retail component will increase because it allows more footfalls." While there are few hotels who have signed up with mall developers, Amitabh Devendra, national head, (Hospitality & Leisure Services), Chesterton Meghraj points out that balanced space in a three- to four-storeyed mall should be utilised productively. Building a hotel is viable for a developer but for a hotelier it is about the price. "There is a fair amount of scope in mixed-use development. The problem is that many hoteliers haven't come to terms with leasing out their hotels or the unutilised space. It is a question of acceptability," Devendra continues. "On one hand it makes economic sense to the developers while on the other, it can prove profitable for hoteliers only if the lease is not high."
In any case, there are more properties coming up in Delhi beyond Gurgaon and in Mumbai towards Thane, Malad, Navi Mumbai and even Pune (the Ruia Group is building an International Convention Center in Pune). The Reliance Group is also planning to set up a convention centre at the Bandra-Kurla Complex in Mumbai. Evidently, budget hotels will do well in cashing in on the opportunity that this offers. Besides, the associated value from a mixed-use development project is bound to increase with the presence of a hotel component.
posted by InCar Group Press Room at 21:09
1 Comments:
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