At least two healthcare chains in the country are exploring an opportunity to convert a luxury hotel into a hospital in Pune, it is learnt. Fortis Healthcare and Manipal Hospitals, both keen to set up large multi-specialty hospitals in the Maharashtrian city, have shown interest in acquiring the sprawling Grand Hyatt Pune for the purpose, according to an industry source close to the development. Spread over 450,000 sq ft built-up area, Grand Hyatt Pune is still under construction.
The trend of converting hotels into hospitals or residential complexes is popular in international markets, mainly the US. In India, it is being explored only now, according to HVS, a consulting firm specialising in hospitality.
A Fortis Healthcare spokesperson said the superspeciality chain had a number of projects under discussion or underway in several cities. “However, we would prefer to speak about them only when we are ready to,” he told Business Standard.
| DOMESTIC WORRIES |
| * Fortis Healthcare and Manipal Hospitals keen to set up large multi-specialty hospitals in Pune, by acquiring Grand Hyatt hotel |
| * DB Hospitality, though, calls the sale buzz a ‘baseless speculation’, saying plan for the Grand Hyatt in Pune is progressing |
| * Analysts say the Maharashtra city already has an ‘over-supply’ of hospitality facilities |
| * A study says Pune has 4,691 branded hotel rooms, and the figure will rise to 5,545 in 5 years |
A senior executive of Manipal Hospitals confirmed the entity was considering Pune as one of the places for a future facility. “We are exploring several options in and around Pune city,” he added.
Grand Hyatt is a project of DB Hospitality, a sister company of Mumbai-based DB Realty.
DB Hospitality, though, called the sale buzz “baseless speculation”. A spokesperson of the group said it was not planning to sell any specific assets. “All our projects are moving towards completion in a timely manner,” he noted. The execution plans for the Grand Hyatt at Pune were “on track”; the company was looking forward to opening the hotel in 2014.
On the Pune market in particular, Anshuman Magazine, CMD (South Asia), CB Richard Ellis, a global consulting firm, pointed at over-supply of hotel rooms. “It may not be feasible to have more hotels in the city. The supply of hotel rooms in Pune is far greater than the demand,” he said.
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HVS Global hospitality services said Pune was a market where no more hotels should be constructed. “There is a huge oversupply,” said Kaushik Vardharajan, its managing director (consulting and valuation). According to an industry study, the existing supply of branded hotel rooms in Pune is 4,691. In the next five years, as many as 5,545 more branded rooms are proposed to be added.
If not hotels to hospitals, there have been other instances of commercial projects being changed after construction or the planning stage. Real estate consultancy firm DTZ cited the example of the 90,000 sq ft Sargod Imperial Mall in Bangalore being converted to a retail and office space now occupied by Citrix. Originally built as a mall by Tata Housing, it was bought over by private investors who were looking at leasing it as a retail multi strata venue or a single tenant, pointed out a DTZ executive.
Magazine argued often proper feasibility is not conducted, resulting in projects being changed during the course. “Market conditions and scale of projects are also hurdles sometimes. This has happened all across India including in tier-II or tier-III towns,” he told this newspaper. “There have been instances when malls have been sold to investors, but subsequently they have had to be converted into office or mixed use projects.”
Again in Bangalore, Shenoy Commercial Complex spanning 60,000 sq ft was converted into Vikram Hospitals sometime ago. “It was built for office and banks,” DTZ said. “After the leases of the initial tenants expired, the building was refurbished and entirely leased by a city-based hospital providing all facilities and services.”
Yet another example is that of a project beginning as an office building and then redesigned as a mall for DLF. Subsequently, it was sold to NetApp, which made a campus spread across 15 acres at Whitefield, Bangalore. Even a wedding hall of around 60,000 sq ft was converted to a retail outlet occupied by Reliance Mart now for a hypermarket.
Apart from these, there have been projects being planned as retail destinations or offices, and then got converted into residential or mixed use projects across the country.
Sanjay Dutt, CEO (business), Jones Lang LaSalle India, said unforeseen demand profile realignments could happen in localities as well as project typologies. “For instance,” he added, “a location may lose its viability as an office, retail or hospitality space even while demand for residential units there remains intact.”
In other cases, a mixed-use format may turn out to be more feasible than a single-use configuration, Dutt pointed out. Satish B N, director (occupier services [South]), DTZ India, said existing developments as well as planned projects had seen their usage change thanks to the dynamism of landlords and developers as well as end users.