Singapore’s sovereign wealth fund GIC is strengthening its alliance with India’s largest listed realty developer DLF as it seeks to participate in helping build the country’s biggest retail mall of more than 2.5 million sq ft, said two persons with direct knowledge of the development.
The new project, a retail and commercial-led mixed-use development to be known as Down Town, will be constructed on a 23-acre land parcel owned by DLF in Gurgaon. The plot is on the highway opposite DLF’s 2.5 million sq ft commercial project Cyber Park.
“The retail mall will be part of this 8 million sq ft project that will also have component of serviced apartments, five-star hotel and commercial development. The project will be developed in two-three phases in more than five years,” said one of the persons cited above.
The development, to be executed through DCCDL, is expected to supersede the country’s current largest retail development 2.5-million-sq-ft LuLu International Shopping Mall in Kochi and DLF’s own 2-million-sq-ft Mall of India in Noida.
The DLF-GIC joint venture was formed in late 2017 after the promoters of the realty firm K P Singh and his family had sold their stake in rental arm DLF Cyber City Developers Ltd. (DCCDL) to the Singapore investment firm.
In addition to their commercial leasing business engagement, GIC and DLF are already working on a high-rise residential project with estimated saleable area of 7 million sq ft near Central Delhi. This project in Delhi’s Moti Nagar will be DLF’s first residential project under the newly initiated business model of selling ready-to-move-in homes.
“The DCCDL platform in joint venture with GIC has been designed to take the form of a business trust, a private Real Estate Investment Trust (REIT),” said the other person.
ET’s mailed queries to both GIC and DLF remained unanswered.
Under the agreement with GIC, DLF can sell completed, yielding commercial projects to this joint venture or build-to-suite yielding commercial assets for this entity. It can also sell land parcels earmarked for commercial development in the near future to this joint venture.
DLF has already identified certain assets and land parcels for transfer to DCCDL and has been in talks with GIC for the same.
As part of transaction between DLF and GIC in late 2017, the promoter family had sold the entire 40% stake in DCCDL for Rs. 11,900 crore or $1.9 billion. This deal included sale of 33.34% stake in DCCDL to GIC for Rs. 8,900 crore or $1.4 billion and buyback of the remaining shares worth Rs. 3,000 crore or $0.5 billion by DCCDL.
Global private funds, including Blackstone Group, Canada Pension Plan Investment Board (CPPIB), APG Asset Management, Xander Group and GIC, have started investing in the retail sector to diversify their investment portfolios in the country and more funds are eyeing such alliance opportunities.
In one of India’s biggest transactions to help build a property investment platform, private equity major Warburg Pincus last month entered into a $1-billion alliance with Mumbai-based developer Runwal Group to fund retail-led mixed-use projects across the country.
Leasing activity in retail real estate has been on the rise and several prominent malls are witnessing robust inquiries for more space from leading brands. In the absence of incremental supplies, demand is rising as existing occupiers are seeking larger spaces.
Private equity investors have revived their interest in retail real estate, after a few years of reduced focus, as part of a strategy to diversify investment portfolios at a time when consumption levels are on the rise. Indian retail real estate witnessed over 300% year-on-year jump in investments at Rs. 1,000 crore during the quarter ended April, showed recent data from Cushman & Wakefield.
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