Kshitij's malls to debut in Gujarat next year

Future Group-promoted Kshitij Venture Capital Fund (KVCF), a Rs 350-crore real estate asset management fund piloting the group's retail-focussed realty development business in the tier II cities and mini metros, will launch its first two malls at Ahmedabad and Vadodara in January next year.

The development of the malls, all in the sub-5 lakh square feet category, will extend KVCF's retail footprint to mini metros such as Mysore and Thiruvananthapuram in southern India.

A hitherto subdued retail market such as Cochin will climb higher up the consumer ladder when a 4.22 lakh square feet mall becomes operational in that city by March 2009.

"We see an opportunity to tap the huge potential held by tier 2 cities where the consumer population has evolved in tastes and buyer preferences have become more variegated," Shishir Baijal, chief executive officer, KVCF, said.

Indore, Lucknow, Mysore, Jaipur and Kolkata are other cities on KVCF's realty radar. The non-FDI compliant KVCF has fully committed its Rs 350-crore corpus.

Future Capital Holdings, the financial arm of the Future Group, has 18 properties under development in India totalling 21 million sq ft, of which seven will be 'market cities', comprising hypermarkets, multiplexes and residential complexes.

Horizon International Fund has committed about $230 million (Rs 940 crore) in these market cities so far. The fund is a FDI-compliant asset management arm of the group and invests in developing areas of 5.38 lakh sq ft and above. Horizon has a corpus of $350 million.

The market cities are are under development in Mumbai, Chennai, Bangalore, Pune Secunderabad and Hyderabad and are expected to be fully operational by 2010.

Cyberabad Market City, located at Hi-Tech City in Hyderabad, will be the biggest of the lot. Spread on a built-up area of 50 lakh square feet, it is set to start operations in December 2010.

Market cities are being planned as self-sustainable ecosystems which will exploit consumer synergies emerging from the symbiosis of entertainment spaces, multiplexes, star hotels, apartment clusters and shopping spaces placed in close proximity to each other.

"Within the shopping space, home accessories and food are large anchors for hypermarkets," Baijal said.

"Multiplexes will cover 5-10 per cent of the total floor space. In a 1-million sq ft mall, for instance, we would be devoting 1 lakh sq ft of space to multiplexes alone."

Real estate developers such as DLF Universal, Suncity, Marg Constructions, Omaxe, the Aerens Group and Ansal are adopting a similar 360 degree approach while designing their upcoming shopping spaces.

Baijal said that pre-leasing activity on many of the new properties would commence in the next few months.

KVCF and Horizon International are managed by Kshitij Investment Advisory Company (KIAC), an associate company of Future Capital. The combined corpus of both the funds totals $438 million, making KIAC India's largest retail-focused real estate fund.