L&T Realty, the real estate arm of construction and engineering major Larsen & Toubro, recently sold its two million sq ft project, including a mall and a hotel, in Chandigarh to the Carnival group for Rs 1,785 crore.
L&T Realty is also trying to sell its upcoming mall in Navi Mumbai's Seawoods. The company was in talks with investors such as Blackstone and GIC, sources said. "It was our strategic decision not to run malls and hotels. We are in talks with investors to sell the Seawoods mall but nothing has been finalised," said Shrikant Joshi, chief executive of L&T Realty.
Several other developers are looking to sell their malls in Mumbai, Bengaluru and the national capital region (NCR).
Sources said the Neptune Group was looking to exit the Magnet Mall in Bhandup. But Nayan Bheda, co-promoter of the group, said they were yet to decide what to do with the mall. "Many retailers are bleeding because of e-commerce. There have been issues with rent and stamp charges. That is why we decided to close the mall," Bheda added.
In Bengaluru, developer RMZ Corp is also looking to exit its upcoming mall Galleria in Yelahanka. "We are leasing out the mall and opening next year. We are not looking to sell the mall immediately but if a good opportunity comes, we will look at it," said Thirumal Govindraj, managing director at RMZ Corp.
"Developers ask why they need to hold an asset for long before returns accrue. The construction business has a short gestation period," said Balaji Raghavan, head of the real estate practice at the IIFL Group. A mall or hotel has a gestation of seven to eight years while residential real estate has a gestation of three to four years.
"In malls, the people you employ and the business you run are completely different. It requires a different mindset," Raghavan added.
Amit Bhagat, chief executive officer of ASK Property Investment Advisors, said, "Office rents have gone up, but mall rents have not. Developers do not see an upside and are exiting the business," he said.
Developers such as DLF and Runwal are not planning to build new malls. "The development of such properties takes three to four years and you cannot predict how the market will behave when they are ready," Rajeev Talwar, executive director at DLF, had told Business Standard last year.
"We are not looking to build malls in Delhi and the NCR now," Talwar said.
Many malls have shut down in Mumbai, Bengaluru and other cities in the past couple of years.
Besides Nirmal Lifestyle in Mulund and Centre One in Vashi, malls that have closed in Mumbai include City Mall and Mega Mall in Andheri, and Dreams Mall in Bhandup. Kohinoor Mall in Kurla is yet to become functional.
Eva Mall on Brigade Road and Sigma Mall on Cunningham Road in Bengaluru have shut shop.
Navi Mumbai has seen Gold Souk Mall, Wedding Mall and Palm Beach Galleria converted into office complexes or showrooms for automobile companies.
According to consultants, at least five malls in Rohini, Vasant Kunj, Pitampura and Gurgaon in the NCR are lying vacant.
An earlier version of this article had said that the Mumbai-based developer Sheth Corp was is in talks with investors to sell its highly successful mall Viviana in Thane. The company has clarified that the management is fully committed to the retail business and all its stakeholders. Any conversation about Viviana Mall being sold is baseless and completely untrue. The error is regretted.
L&T Realty, RMZ, Sheth Corp looking to sell malls
DLF, Runwal not looking to build new malls
Nirmal Lifestyle, Centre One, City Mall, Mega Mall in Mumbai shut shop
Gold Souk Mall, Wedding Mall, Palm Beach Galleria in Navi Mumbai converted into offices, showrooms
Four to five malls in Rohini, Vasant Kunj, Pitampura and Gurgaon lying vacant