HDFC Property Ventures is investing $20-25 million into South India’s largest central business district (CBD) mall developed by Nitesh Estates in Bangalore. This move likely signals the $900-million fund's entry into the retail infrastructure sector during a challenging market climate.
Investment Details
HDFC Property Ventures plans to acquire around 20-25% stake in the 6-lakh sq ft Nitesh Mall, designed by Seattle-based Callison. This mall is Nitesh Estates' first venture into retail, with an estimated project cost of Rs 300 crore.
Location and Development
The Nitesh Mall will be constructed on a 5.5-acre plot near the Leela Palace, off the Indiranagar 100-feet road, which is one of Bangalore’s premier retail zones featuring flagship stores of major brands. When contacted, Nitesh Estates’ director of development, LS Vaidyanathan, declined to comment on the deal. HDFC Property Ventures CEO KG Krishnamuthy was unavailable for immediate comment.
Market Context
This development occurs amidst a period when private equity funds are believed to be cautious about investing in real estate and retail due to dampened consumer sentiments and economic downturn. HDFC Property Ventures is the third PE partner for Nitesh Estates. Previously, the firm received investments from New-York based Och Ziff Capital and Citigroup Property Investors, the latter co-developing the Ritz-Carlton hotel in Bangalore with Nitesh Estates.
Future Plans
Nitesh Estates has identified properties in southern cities like Chennai, Thiruvananthapuram, and Kochi for similar retail ventures. The construction of the Bangalore mall is slated for completion by the end of 2009.
Market Comparison
Current retail rentals on Indiranagar’s 100ft Road are estimated at Rs 200/350 per square foot. The Nitesh Mall will be the largest retail infrastructure in Bangalore, surpassing other prominent malls such as The Forum (3.5 lakh square feet), Garuda (1.5 lakh square feet), and UB City (1 lakh square feet). In the past, HDFC Property Ventures has shown interest in organized retail, with media reports linking them to global retail giants like Carrefour.