News & Views on Indian Real Estate

Thursday, August 07, 2008

HDFC Property to buy into Nitesh Mall

HDFC Property Ventures is investing $20-25 million into South India’s largest central business district (CBD) mall developed by Nitesh Estates in Bangalore. The move probably marks the $900-million HDFC Property Ventures’ foray into retail infrastructure in a rather tight-market environment. HDFC Property Ventures will pick up around 20-25% stake in the 6-lakh sq ft Nitesh Mall, which is being designed by Seattle-based Callison. Nitesh Mall, which is the Bangalore-headquartered real estate firm’s first retail play, is estimated to be a Rs 300 crore project. The Nitesh Mall will come up on a 5.5 acre patch near hotel Leela Palace, off the Indiranagar 100-feet road that is considered one of Bangalore’s high-street retail hubs, with most big brands operating their flagship stores there. When contacted Nitesh Estates’ director, development, LS Vaidyanathan declined to comment on the deal. HDFC Property Ventures CEO KG Krishnamuthy could not be contacted immediately.The development comes at a time when private equity funds are believed to be staying away from real estate/retail investments on account of the weakening consumer sentiments and an economic slowdown. HDFC Property Ventures is Nitesh Estates’ third PE partner. Last year, the firm attracted investments from New-York based Och Ziff Capital and Citigroup Property Investors, with the latter co-developing the Ritz-Carlton hotel in Bangalore with Nitesh.Nitesh Estates had announced that it has identified property in southern cities of Chennai, Thiruvananthapuram and Kochi for similar retails initiatives. Construction of the mall in Bangalore is expected to be completed by 2009-end.The current retail rentals on Indiranagar’s 100ft Road are estimated at Rs 200/350 per square feet. The Nitesh Mall will easily be the biggest retail infrastructure in Bangalore where the other prominent malls are The Forum (3.5 lakh square feet), Garuda (1.5 lakh square feet) and UB City’(1 lakh square feet). It must be mentioned that HDFC Property Ventures has signaled its interest in organized retail in the past, and interestingly, unconfirmed media reports earlier have linked HDFC Property Ventures to global retail biggies like Carrefour.