Singaporean developer forms joint ventures to invest in 15 malls across country

Singapore’s CapitaLand is pushing into India’s retail sector by investing in 15 malls with a total estimated completion value of S$2.1bn (£745m) with the aim of spinning them off into a REIT.

CapitaLand, south-east Asia’s largest property company, has entered into a 50:50 joint venture with Bangalore-based developer Prestige Group for seven malls in southern India. It has also taken an undisclosed majority stake in eight north Indian malls in a venture with Delhi-based developer Advance India Projects.

‘The two partnerships provide CapitaLand with a head start in the retail real estate business in both north and south India,’ said CEO Liew Mun Leong. ‘We expect to deepen our retail and fund management presence in India to become a significant long-term retail real estate player there over time.’

CapitaLand said it would invest more than S$1bn (£355m) in the malls, which will have a total net space of more than 11m sq ft (1.02m sq m). The investment is to be funded by its 45%-owned CapitaRetail India Development Fund, which closed on 22 November last year after raising US$600m (£300m).

CapitaLand said it plans to exit the investments by injecting the properties into a REIT, but had yet to decide when or where the properties would be spun off, citing the ongoing turmoil in global financial markets. ‘In the current volatile market, that is very hard to consider,’ Liew said.

CapitaLand said it views Indian retail as an attractive sector because of the country’s young and increasingly affluent population. It plans further exposure through its US$75m (£38m) investment in the Horizon Realty Fund, which owns six shopping centres in co-operation with local retailer Pantaloon Retail.

CapitaLand and Advance India have identified eight projects, of which the Udaipur’s Celebration mall is already under development and targeted for completion in the first quarter of 2009.

The other seven projects are in the pipeline, and comprise Advance India’s Amritsar and Khanna schemes and projects in Nagpur, Jaipur, Jalandhar, Gwalior and Varanasi.

Udaipur Celebration mall, in one of India’s top tourist destinations in the state of Rajasthan, will comprise 385,000 sq ft (35,767 sq m) and is already 51% let.

Among the tenants are McDonald’s, Arrow, Levi’s, Benetton, cinema operator PVR, Reebok and supermarket group Spencer.

Of the seven projects with Prestige, CapitaLand has already signed definitive agreements for four – two in Bangalore, one in Mangalore and one in Mysore – and expects to invest in the remaining three ‘very soon’.