Simon plans India foray via joint venture

Simon Property Group (SPG), a US-based investment trust engaged in ownership, development and management of retail real estate, is set to enter India through a joint venture (JV) with a local company.

Two independent sources in global brokerages said SPG Chief Executive David Simon had, last week, told analysts in a conference call that the group was "very close to starting a potential joint venture" in India.

The company organised the conference call after announcing its second quarter earnings on August 1.

They also said the chief executive had mentioned that he would shortly form a joint venture "with a real estate and industrial company in India where the group would begin to look for opportunities".

Although the name of the probable local JV partner could not be ascertained, local real estate sources confirmed that SPG was indeed in talks with two-three companies in Mumbai.

"We cannot tell you whether we would be able to strike a deal with SPG," said top executive of a mall development firm which was in talks with the foreign realty major.

"Typically, it takes six months for a deal of this sort to fructify and the US company has just begun searching for its Indian partner. So, it may take a while for a business deal to be announced," said a domestic real estate consultant, adding that a number of international real estate firms were currently interested in forming joint ventures with domestic firms given the boom in the sector.

Headquartered at Indianapolis, SPG is the largest publicly traded retail real estate company in North America with a market capitalisation of nearly $42 billion.

It is associated with 284 properties in the US, aggregating 200 million sq ft, which is exactly double of Reliance Industries' ambitious plan to have a pan-India footprint through malls, convenient stores and agri-distribution centres.

According to SPG's website, it also has interests in 52 European shopping centres in France, Italy and Poland; five 'Premium Outlet' centres in Japan and one such unit in Mexico.

At present, there are close to 350 malls under development in India, with groups such as Unitech, DLF, Future Group (through its real estate funds) and Prozone being among the more prominent players in the category.

According to industry sources, most global companies are being fronted by the foreign banks present in the country in their search for suitable JV partners.