The ILC Group, an emerging leader in Delhi NCR’s real estate space, is currently developing a complete spectrum of multiple institutional investment-grade assets across commercial, retail, IT, residential and mixed-use segments.
Equipped with an experienced, professional management team and promoters with high market credibility, ILC is able to innovate while striving to set industry standards on excellence. It’s upcoming shopping mall, ‘Good Earth Sixty 9′ in Gurugram is touted to be a retail landmark post completion.
Rehan Huck, Retail VP, ILC Group, spoke to IMAGES Retail about the current state of the retail real estate industry in India and the position of upcoming malls in the country…
What, in your opinion, is the current state of the real estate industry in India, focusing on the lockdown and unlock phase?
The real estate market has faced several disruptions in the past few years including Demonetisation, GST rollout, followed by the Real Estate Regulation Act. In March 2020, realtors were sitting on inventory that would take several quarters to clear and the pandemic just made things worse for the sector. The lockdown resulted in a sharp drop in demand for property, which resulted in an exponential decline in prices across segments and markets and by September, the number of quarters required to clear unsold real estate inventory had shot up even more.
How has this current state impacted the progress of upcoming malls in India? Kindly elaborate from your brand’s perspective.
For the shopping mall industry, the pandemic turned out to be a complete bloodbath. As a result, only 5 malls out of 54 planned new malls could make it through in 2020. The situation became even worse for the upcoming malls and under-construction projects. Construction was utterly prohibited for almost two months and this further delayed the completion process.
Aside from this, there was a significant decline of up to 20-25 per cent in the footfalls across all major shopping malls in the country even after the Unlock phase. Consequently, this led to more losses for developers and builders even after they completed the project. And brands too were hesitant in partnering with the new ventures during this period. Also, the fact that no policies or initiatives were announced for this sector during the Union Budget 2021-22 simply added to the industry’s woes.
How are you dealing with construction, leasing, revenue, and manpower wrt the current crisis situation?
Construction: We did not face a major set-back in construction except when the construction activities were restricted by the Government and the migration of workers for a certain period. We resumed our work as soon as the restrictions were lifted, but the projects are invariably delayed by a few months and they will all have a financial bearing.
Leasing: This too has been slow. The retail sector is still recouping from the pandemic and had no expansion plans during and post-pandemic. The focus was to survive which led to the focus being on renegotiations and realignment. Since we are approximately a year-and-a-half away from launching the mall, we are holding leasing as of now. We had concluded the anchors before the pandemic and were on the verge of commencing vanilla leasing.
Manpower: We have the desired manpower at the site and from the labour point of view, things are back on track.
How do you plan to prepare yourself for a similar situation in the coming times?
No one had ever imagined such a situation arising. However, we have learnt and are better equipped to handle things, should such a situation ever arise again. Customers are now more cautious about their safety, hygiene and wellbeing and these will form the new-normal in post COVID-19 times. We have also allocated funds to help us tackle such a situation in the future.
Consumer shopping behaviour is set to change a lot, as is consumption post-COVID and lockdown. Will it make an impact on your future retail mix?
COVID has changed a lot of things. It has brought about a lot of disruption in the trade and most of it is here to stay:
Use of Technology: People are more tech-savvy and getting quite comfortable with the use of technology. This trend is going to stay, and more variants will be added to this in the coming months. People will go out only when they wish to, else it will be delivered to the doorstep.
Value Seeking/ Deal Seeking: A majority of consumers are now buying only if there is a deal. Everyone wants a deal. Everyone wants to be smart.
Revenge Shopping: We are yet to witness revenge shopping as if now. While some categories have bounced back to pre- COVID numbers, some are still struggling to reach that point.
The future mix of the mall will probably have a new code of optimal size for each category of retail. Omnichannel and deliveries will push the current optimal sizes downwards marginally to begin with. There will be greater emphasis on anchor driven malls and therefore malls will be more anchor heavy in coming years. F&B will bounce back and will stabilize or exceed the pre COVID numbers but with a new breed of brands or the ones which have grown stronger during the lockdown due to their product or their business agility.
Will you consider shifting to a revenue-sharing model with your tenants after the launch?
All brands are looking at a pure revenue share arrangement for the next 6-12 months at least to stabilize their business. I don’t think any new deal is going through across the categories of anchor and vanilla, where the focus is not on a PRS for the first few months. Smart Developers are taking the punt and accepting the revenue share deals and focusing on building a good product.
All the deals that we have made in the last eight months – and they are quite a lot in number –
have a flavour of the above mentioned. We have focused heavily on getting the stacking and brands mix right.
What SOPs are you following in as far as mall construction and maintenance is concerned?
The emphasis is on safety and hygiene and it will be here on. Standard protocols at the entries are being followed with sanitizers and temperature checks. Mall cleaning and sanitizing schedules are strictly in practice. Safety gears for the workers, labourers, etc are in practice. We also do random checks and audits to ensure things are in order.
Is your mall in the final phase of completion now?
One Mall (Good Earth City Centre, Southern Peripheral Road in Gurgaon) is under construction and will be operational in a year and a half. Another is a 2.3 million square feet development at Golf Course Extension in Gurgaon under the final stages of conceptualisation. Yet another mall Epicah by Propel in Moti Nagar, Delhi will be delivered by Diwali 2021. Propel is the Development Management Arm of ILC.
Any new innovations related to technology and consumer convenience that you have decided to include in your malls after the COVID situation?
We continuously strive to use the latest and best possible technology in the development of our projects. This helps us provide a terrific user experience coupled with effective and efficient management of resources.
In as far as measures taken to deal with the pandemic, we have infrastructure in place to ensure all necessary protocols are met. This includes contactless sanitisation, social distancing norms and limited occupancy in stores to name a few. We have also hired additional staff members to ensure that these measures are properly implemented.
Apart from these, we are working towards building sustainable, resource-efficient and environment-friendly projects for the years to come. This comprises efficient use of water and energy along with several additional green features.