In a chat with “Shopping Centre News,”Supertech Director Mohit Arora discusses the Supernova project (which he says will redefine the concept of luxury in India), the groundwork done and the opportunities in tier II and tier III cities.
When did Supertech start retail operations in India and what has been its contribution to the retail real estate so far?
We started to get into retail real estate five to six years back with our projects in Noida, Vaishali and Vasundhara in the NCR region. We then entered Haridwar and Rudrapur. In Haridwar, we have come up with Uttarakhand’s largest mall of about 1 million sq.ft. which got operational in the first week of April. All these retail properties are a part of bigger mixed-use developments which includes hospitality. We are also building a 4,00,000 sq.ft. mall in Meerut which will become operational in the next two months. We have a fairly good amount of retail space in India which we have been developing over the last five years.
Are all your retail projects a part of mixed-use developments? If yes, why is this so?
The concept of mixed use means a place where everything is offered, including residential, commercial and office spaces. Most of our projects are mixed-use developments considering their size. For example, our development at Meerut includes two hotels and a mmall. The project in Haridwar also includes two hotels and about 5,00,000 sq.ft. of retail area.
These days, bigger malls do not develop solely as a standalone structure. Some have amusement parks while others have hotels. It is the smaller projects that are mostly standalone. When a project starts becoming bigger, the developers and authorities want to develop it as a destination project. Nowadays, we are creating business and leisure destinations where people can come and enjoy, stay at a hotel and shop as well.
Tell us something about your Supernova project that is getting so much publicity. What are the features which will differentiate Supernova from other retail spaces?
Supernova is one of the actual mixed-use developments in India where we have 1 million sq.ft. of retail and office space, 700 residential apartments, two fivestar hotels, serviced apartments and luxury retail. It will have five towers – Spira, Nova, Astralis, Radiance Place, and Aurora. In Supernova, people can walk to work and walk to shop – it’s like a whole city within a small development. Mid-range and high-end shopping facilities will be available at the property.
There are other USPs too like the location of the mall which is very close to Delhi – it is the first development the moment you enter into Noida through the Kalindi Kunj side. Connectivity is also good, as Supernova will be connected to the Delhi Metro and the Noida Expressway. And the kind of hotels and brands we are planning to bring in to the property are going to make it a world-class luxury format.
Another highlight of Supernova is that it is an integrated development where everything is connected via roads, metro and expressway.
When will the mall become operational? How is the launch planned?
We announced the project in the beginning of 2012 and have already started the construction. We will deliver it phase-wise. The first phase will be complete inthree years, and the last in five years. The first phase comprises the mall, the office building and the residential building. Then we have an iconic tower, a 300-metre tall structure, which will be completed in five years.
What kind of investments are you making in Supernova, especially its retail component?
The total investment cost for the project is going to be nearly Rs 4,000 crores. However, we are developing Supernova as one single project, so it is difficult to calculate cost of its different components separately. But tentatively, the investment into the retail part of the project is about Rs 500 crores.
How do you rate the chances of success of Supernova, considering that other big projects – both operational and upcoming – already exist in Noida?
Many retail projects are coming up in the area but many retail brands will also be entering the market over the long term which will be looking for quality retail spaces. At a glance, it might look like there is going to be an oversupply of retail space, but according to our feasibility study, even the upcoming retail properties will not be enough to satisfy demand of retailers and new brands.
I believe Noida is an upcoming market which will beat Gurgaon, or even Delhi, for that matter. The kind of developments which are coming up and the projects that are planned will make Noida a world city. It will be way ahead of Dubai and Singapore. Hence, the only things that will decide the success or failure of Supernova are delivery and quality. It is actually going to be a competition of delivery and not of brands because I think there will be enough retail brands in the market for all these developments.
Are there any land approval or security issues faced by Supernova, considering the size of the project and the recent mis-happenings in the other big ones in the area?
Supernova is a world-class development. We have 14 consultants just for the designing of the mall. We have taken the world’s best consultants in terms of security, traffic, facades, and MEP services because all these things matter a lot. The MEP has to be designed flawlessly to make the mall a safe place. We have a traffic consultant to design the way the public and traffic will move in and around the mall, keeping in mind all the safety and security concerns. We also have a special security consultant on board who will design where to keep the entries and exits and how to manage the whole security of the mall.
It is uncommon to find all these consultants working for a project, but we have hired all these in the initial phase of Supernova itself. The kind of project we are coming up with is an out-of-thebox development which is similar to the big developments all over the world. We have brought in Benoy, the London-based designers, which have worked on successful international malls like Bluewater and Westfield in London.
As far as the various approvals are concerned, with the kind of property development happening in Noida, the support of the Government and the local authorities is a key factor. In fact, we are very happy with the kind of support the Noida authorities have extended to us. The Government is very optimistic about the development of the entire Noida region. In terms of retail, FDI policies and taxes, we have a big wishlist from the Government, but in the case of development, they are doing their best.
What will be the leasing/rental model to be adopted by the mall at Supernova and why?
It will depend upon negotiations and deals with the retailers. We have already signed deals and those are a mix of everything – some are pure revenue share model, some MG+ revenue share, while others are pure rental. We have some kind of leverage because of the location advantage of the property. We will follow different models for different retailers.
What is going to be the tenant mix considering the size and location of the mall?
There will be 1 million sq.ft. of retail space out of which 200,000 sq.ft. will be dedicated to luxury retail. We are going to have top international luxury brands like Burberry and Louis Vuitton. Rest of the 800,000 sq.ft. will be for conventional retail, but on the premium side. We will have all sorts of tenants, from lower-end hyper to high-end hyper, providing different shopping experiences. There will be special zones in terms of budget, economy and premium in apparels and other categories. Since it is a huge space, we are going to divide it into special zones. There are some brands we have signed LOI with but it would be premature to reveal anything about them. However, we will be disclosing this information very soon to the public.
Did you take any inspiration from the existing global projects for Supernova?
We travelled all over the world to get this project designed in the best possible manner. We saw lots of projects in Singapore, London and Hong Kong. Although the inspiration has been taken from many international projects, the closest you can compare Supernova with is Elements in Hong Kong which is a similar kind of development with 1 million sq.ft. of retail including hotel towers and residential and office spaces.
We are trying to create this entire project as a leisure and entertainment destination. There will be a big entertainment zone in the mall where we will bring in museums and art galleries on the lines of the Madame Tussauds wax museum in London, which is not a trend in India yet. Three years down the line when this mall becomes operational, Indians will witness the world’s best entertainment zone.
Was there any research conducted regarding the feasibility of Supernova?
There was a three-month feasibility study conducted by Knight Franks and Cushman & Wakefield before we started the project.
Almost all your retail projects are located in the NCR and tier II and III cities? Is there any specific reason for this? How do you plan to make business out of retail?
When we entered tier II and III cities, we saw a lot of potential in terms of retail spaces which is paying off for us today. We thought that these locations will give a very good return on our projects and the success can be witnessed now. We also have retail projects in Noida and Ghaziabad. Though we have more been into residential developments, we have now started focusing on retail in a big way.
Our flagship project Supernova is going to be one of the biggest projects of retail real-estate in the NCR. The changing face of retail in India has led us to make this shift. Retail is going to be a booming industry in the next two to three years in the country. Manyinternational retailers are going to enter the Indian market and the industry will multiply many-folds. There is a business model attached to every development and we are going to follow the same trend in this market.
How do you think the opening of FDI in retail will help mall developers in terms of footfalls, investments and returns?
FDI will give a boost to the retail market in India. I think it is going to be allowed soon and new retailers will enter the country. When we compare the Indian retail market to international ones, we find that its size is just 2-3 per cent of what is present in the West. Many international retailers are waiting for FDI in multi-brand retail to open up. Once they arrive, there is going to be huge demand for retail space.
What are your investment and business plans for the next five years?
We are planning to invest about Rs 700-800 crores in the retail segment in Noida and other regions.
Do you think India is ready for such huge ventures in retail real estate?
Yes, of course. The Indian economy offers a huge opportunity and has not yet witnessed the best of the retail industry. There are only about 200 odd brands in India! If we talk about the world, there are thousands, and very few of them have entered our country. I believe in the next five years, India will be the biggest retail destination in the world because of the kind of purchasing power concentrated in its metros.
Once the FDI is allowed and the government loosens the policies, India will witness a huge growth in the retail segment. The growth might not be great in the luxury segment but in the low and mid segment, the country has lots of potential. That is why huge retail real-estate ventures will be very successful, a fact corroborated by many studies.
*This interview was originally published in June-July 2012 issue of Shopping Centre News.