How commercial space (mall development) drive residential boom

The real estate market is one of the fastest growing sectors in India. It successfully attracts domestic as well as foreign investments. Many factors have contributed to this growth mainly – large middle class base, rising income and rapid urbanisation. The sector can be broadly classified as residential, commercial, retail and hospitality. Are these four sectors complementary? Does anyone sector boost the development of other sectors too?

The answer is an emphatic yes. Retail is the most profitable investments in real estate, if the correct principles are implemented.

Consider the live example of a well-known suburban mall in Mumbai – Inorbit. A decade back, when the shopping centre had opened, it was surrounded by a waste land. The area around the mall had hardly developed and the property cost was around INR 2800 per sq.ft. However, soon Inorbit gained recognition and became a weekend destination. The development of the hyper market – ‘Hypercity’ next to it added to the area’s popularity. It became a commercial hub and premium residential complexes developed nearby. The property prices saw a meteoric rise of around 400% and today the cost per sq.ft. in this area is approximately INR 14000 – 15000.

Another fitting example would be of Gurgaon. Located about 15 miles south of the national capital, the city barely existed two decades back. With the advent of malls like, DLF City Centre, Amby Mall, Metropolitan Mall etc., Gurgaon’s fame grew. Within a few years residential as well as commercial developments were mushrooming in the area. Today Gurgaon has become a preferred location for buyers looking for residential properties. The cost per square feet is around INR 12000. There is immense demand for new developments.

Development of residential, commercial and retail in the same vicinity is advantageous for the buyers. It helps them attain a better lifestyle as their travel time between work place and home is reduced. In a country where travel time is calculated in hours spend on road rather than kilometres it is a definite boon. Having entertainment and retail conveniences close by is always preferred.


Some properties are also sound investment vehicles, as a successful mall in the same neighbourhood makes the location more premium. There are usually other components such as health facilities and hospitals that also develop nearby and give the location more prominence. A popular mall increases the traffic and crowd in a certain area. The particular area becomes well known and highly visited and hence the demand for residential in and around it goes up.


Mixed Use Developments - the new trend
The above examples clearly show how mixed use developments have gained significance. Small contained townships that incorporate residential, retail, hospitality and commercial or office spaces in the same area is the new emerging concept. Mixed-use developments are built over a large area and in phases. They are coming up in metros as well as tier-II and III cities.

This trend has proved to be profitable for developers.
A developer captures all the segments – residential, retail and commercial in the same area. His risk is diversified and helps him get the maximum returns on his investment. The close proximity of residential and commercial helps develop the retail asset which manages to become a source of annuity later. With FDI in retail opening, this concept may get a further boost. More and more developers are considering mixed use projects instead of standalone developments.


International Scenario
Investment strategies are getting focused towards creating large mixed use developments with retail as the catalyst. The other development components such as residential, commercial, etc. tend to benefit from the retail mall as people desire to live nearby to major retail and entertainment destinations. Companies too, are keen to have their offices within these environments and hotels serving both business and leisure travellers wish to be located in the vicinity.



The Gateway Theatre of Shopping at Durban, South Africa, developed by Old Mutual Property, our partners for India, is one such example. This mall has been the driving force for many new developments in the area. Originally a sugar cane plantation site, the launch of Gateway in 2001 has led to the development of a new town centre and both commercial and residential developments within the region

In conclusion, the sub sectors of real estate – residential, commercial, retail and hospitality are complementary and drive growth for each other.

As real estate markets around the world continue to rebound from the global financial crisis, in India the sector has grown to become the second largest employer after agriculture. Future projections show that the sector will continue to grow at a rapid pace. With favourable economic fundamentals and demographic factors this seems true. As a critical sector and a major contributor of country’s GDP, this is good news.

By Kunal Premnarayen
Group CEO
ICS Group

Design Directions

Authored article by Mr. Stephen Roberts in Retail Today February 2013 issue

Stephen Roberts lists the things to remember when developing retail centres

By Stephen Roberts, Managing Director of Bentel Associates, a joint venture between ICS Realty and Bentel Associates International.

While the basic design principles remain constant, it is the local issues that remain a challenge. That is why it is essential for any architectural firm to have local presence in the area they plan to work in.

Consumer Psyche
Retail design is far from static, it changes not only with the times, but with the location, the local community it serves, the size of the centre and the tenant mix. Since India is a nation of such social diversity, the first challenge is to understand the psyche of the clients and future customers of the particular town or city in which the centre is to be established. One cannot safely assume that the correct formula for Mumbai will necessarily be the same in Chennai or Bengaluru.

Clear Deliverables
Whether the requirement is for a mega mall or a convenience centre, it is imperative to ensure that the deliverables are clear. This may seem an obvious point, but since retail design is still relatively new to India, one finds that prospective clients are not always familiar with the finer issues that can make a difference between a successful centre and a white elephant. A retail centre is not simply the traditional street centre with a roof over it. You cannot simply put a few thousand feet of retail area together and expect a thriving centre. It is first necessary to understand that success means success for all the interested parties, from the client, who wants to make a good return on his investment, the retailer, who wants a profitable turnover, the customer, who wants a pleasant shopping experience, to the local authority, who are interested in a centre that is both attractive and traffic friendly.

In the development stage of retail projects, the inclusion of Property Managers and Leasing Agents, who both understand the finer points of retail development and the local market, is a great benefit.

High Real Estate Cost
A particular challenge in designing for the developer is the high cost of land, which forces the developments to be multi-level, with the parking on basement or upper decks, which adds to the capital cost, negatively affecting the viability and forcing higher rentals. International retail designs usually have 2 levels, with the parking all on grade. However in India there is a need to adapt to the multi-level designs, which are made easier by the popularity of the cinemas and large food courts that provide the bulk for the upper levels.

Parking System and Construction Time
It is somewhat of a challenge to convince some developers of the need for well designed parking areas, with good ingress and egress and circulation. Automated parking areas are a definite no-go for retail centres. Customers need the convenience of easy parking to contribute to the whole feeling of a satisfying shopping trip. Another challenge facing retail development is the speed of construction, due to two factors - the necessity for parking basements and the high labour content as opposed to more modern forms of construction. Parking basements always take time depending on ground conditions, and using buckets to haul concrete up 2 storeys and transporting materials through the site manually is time consuming. When developments get to site, there needs to be a construction programme that is detailed to the nth degree, so that the ordering of materials and equipment is coordinated to avoid unnecessary delays in delivery.
Budgets and cost control are other challenges that are unique to India. The use of professional cost consultants, otherwise known as ‘Quantity Surveyors’, would in my opinion be of great value to any project. To begin the project with calculated costs, including all land costs, professional fees, municipal fees, rentals, interest charges and returns, eases the request for finance and enables the investors to sleep easier.

Mantis shines in the travel industry's spotlight

It was a momentous moment for hospitality’s marketing-and-public-relations champion, Adrian Gardiner and his Mantis Collection team when their efforts were rewarded with five world travel awards. These awards come at a very opportune time for the Mantis Group as they have recently set up a joint venture in India with the ICS Group called Ayana Hospitality. The venture is focused on providing design and development, management, marketing and conservation/wildlife related services to high-end boutique hotels and nature retreats.

Before a select, invited audience of the industry's leading luminaries and international media the Mantis Collection was presented with:
• World's Leading Luxury Boutique Hotels Collection: Mantis Collection
• World's Leading Boutique Cruise: Zambezi Queen
• World's Leading Polar Expedition Operator: White Desert, Antarctica
• World's Leading Ice Hotel: Ice Hotel, Sweden
• World's Leading Extreme Adventure: Bear Grylls Survival Academy

The Oberoi, Gurgaon in New Delhi, was the impressive venue for the red-carpet 2012 World Travel Awards’ grand final gala ceremony on December 12, 2012. It was hosted under the patronage of Incredible India and Mantis’ awards were accepted by Kunal Premnarayen and Akhil Behl from Ayana Hospitality.

Adrian Gardiner, the Founder of Mantis said, “This recognition will take us running into 2013,” says Gardiner. “All these tributes are a great honor and a testament to Mantis’ credibility. To have been awarded the World's Leading Luxury Boutique Hotels Collection title is an important accolade - and a first for Mantis.”
Accepting this award, Kunal Premnarayen, Promoter, Ayana said, “It is a pleasure to receive this award on behalf of Mantis. They have an established an incredible track record in providing unique experiences to the boutique luxury clientele with a strong philosophy towards conservation and eco-friendly practices. We are very excited to have cemented a long-term relationship with them.”

Speaking more on the Joint Venture, Mr. Akhil Behl, CEO, Ayana said, “These awards represent our partner’s ability to deliver a once in a life time experience to their clientele. Our JV will bring the Mantis experience to India with a long-term strategy in place to address the greater opportunity in South East Asia.”
Embracing the experiential travel theme that has become popular among high net worth travelers, Mantis will launch its eXreme brand in 2013. Three of the five awards pave the way for this new venture that aims to fulfill adventurers’ bucket-list’s dreams and give them the right to say ‘I did it’!

“In terms of the boutique cruise market many small ships are being launched around the world,” adds Gardiner. “They are filling a particular niche within the cruise sector of the market and we’re honored to have the World’s Leading Boutique Cruise in our portfolio.”

World Travel Awards (WTA) was established in 1993 to acknowledge, reward and celebrate excellence across all sectors of the tourism industry. Today, the brand is recognized globally as the ultimate hallmark of quality. It has been referred to by the Wall Street Journal as the "travel industry's equivalent to the Oscar's”.

Kunal Premnarayen's interview with Business Bhaskar

Right time for expansion of real estate in small and medium towns

ICS Group, engaged in real estate, hospitality and financial services sector has planned major projects of expansion in realty and hospitality business. Holding company of the Group, ICS Realty has collaboration with Old Mutual Property, Bentel Associates, Mantis International of South Africa and Secure Parking of Australia. Kunal Premnarayen, CEO, ICS Group, while talking to Business Bhaskar's Ajay Kumar, elaborated in details about his expansion plans. Here are the excerpts :
Please tell about your Group in detail.

The group was established by my father. He is possessed with the expertise to select the sector for business where potential for future expansion is available. We have already engagaed in road construction. Six years back we left road projects. This was the NOIDA Toll Road Project where my father is still on the Company's Board of Directors. This being a very tough sector, our decision to come out of road projects was a strategic one. At present, we are engaged in financial services, real estate and hospitality sectors.

There is much emphasis on infrastructure sector in India and yet you say road construction is a tough sector. Any specific reason behind it?

This is a different industry. Bureaucracy plays a major role here. We have the Chinese example before us where huge investment is being made in road projects. India is yet to reach that level. Our Chairman explored different areas for development. Real Estate is one of them. Although we are there in this sector, but we are not developers. We are in businesses which are complementary to each other.

You said, you are in real estate sector but not a developer. What type of services do you provide?

We are engaged in the activities like designing, property management and development, car parking management, asset management, corporate finance and hospitality.

Does the car parking management also form part of real estate business?

In Mumbai, Delhi and other metro cities, car parking is already is an issue. We took it as a profitable and independent service business. Even if you are able to manage your car park well, there are other challenges due to lack of better design and construction. Hence, on the design level we incorporated the best international methods in car parking business. We entered into car parking business about 10 years back. We have tie-up with Secure Parking Corportation, an excellent car parking solution company of Australia. In India we have clients like, EMMAR-MGF, Sahara, Inorbit, Oberois and Phoenix High Street. In this sector we have almost 45 operational projects.

Did you constituted joint venture in architecture for this reason only?

ICS Group has tie-up with South Africa's leading retail architecture company, Bentel Associates International. In the year 2002, Bentel Associates India was established. Bentel is presently providing its services to projects spread over more than 4 Crore sq ft in retail space. Projects like Retail, IT Park and Mixed Use Properties are included in it.
Who are your big clients?
We have many big corporate clients. We are working with big developers like Prestige Group, DB Corp, Sudhil Mantri, South Consortium, etc. Some of these projects have been completed, while some are under construction. We have about 30 clients accross the country.

How do you visualise the growth of real estate business in India?

Real estate business has vast potentials to offer in India. Huge potential can be seen in residential sector. As a company we are focusing on real estate space. There has already been improvements in office space. As such, this is the right time to invest in office space in Delhi or Mumbai. As regards shopping malls, high cost of commercial property in large cities is causing impediments. However in the secondary and tertiary cities the situation is not similar.

Is your Real Estate Fund capable for investment in the Indian projects?

We developed our first retail focused real estate fund in the year 2008 in collaboration with Old Mutual Property of South Africa.The fund known as Triangle Real Estate India Fund LLC presently possesses an amount of US$ 70 mn (approx Rs.375 Crores). Listed on Mauritius Stock Exchange, Triangle fund has invested in three major retail projects in Aurangabad, Nagpur and Coimbatore. At Nagpur we have received great pre-launch response. In the next two years we will have other nine sites.
How much amount of money you plan to collect from foreign for the future projects?
We are in the process of raising US$ 200 mn (approx Rs.1350 Crores) with our associate Old Mutual Property. We will mainly concentrate on institutional investors. We are focusing on Asia, Middle East and South Africa. But due to the downslide in value of Indian rupee this process might be tough.

Do you believe that the international economic depression has affected the Indian real estate business?

Certainly, the Indian business has been affected. Foreign investors are looking towards the risks of their investments. However, with opening of retail sector for the foreign investors the situation will change. Keenness in the policy decisions is a good thing. But it will take at least two years for its effect to become visible. Both the hospitality and shopping centre business are extremely dependent on debts. However the good thing is that India is still growing at a rate of 5-6 per cent.

Interview of Kunal Premnarayan, Group CEO, ICS Group

“The ICS Group’s vision is to be an integrated player in the real estate and financial services sector by partnering international domain leaders and by developing a culture of transparency, governance and fair-play.” Kunal Premnarayan in a candid chat with Anil Mascarenhas of IIFL, discussed about the current and future projects of ICS Group. Read more about the interview of Kunal Premnarayan by IndiaInfoline.com

Secure Parking Solutions

In 1999, ICS Group was the foremost player to enter the organized car park management business in India. In 2007, ICS partnered M/s Secure Parking, Australia, a leading car park management company based in Australia. The Indian business was repositioned as Secure Parking Solutions (SPS). Today the company has pan- India presence. SPS is headquartered in Mumbai with its office in Delhi.

Secure Parking (Australia), was established in 1979 and is currently the largest car park operator in Australia. With more than 15,00,000  parking bays, Secure Parking International is the largest  car park operator in Australia, SE Asia, India and Middle East region. Secure Parking has forayed internationally and has successful operations with more than 900 car park projects across Indonesia, Malaysia, China, India, Singapore, UK, Philippines, New Zealand, UAE, Lebanon, Syria

It presently employs more than 500 people manages over 30,000 with 60 projects across country.  Secure Parking s provides comprehensive services to its consumer  that includes car parking planning, signage, revenue modeling, parking rate structure, etc.

Company Profile

ICS Group is a proficient business group that strives to create value for its stakeholders. With expertise knowledge in arenas including real estate, hospitality, asset management and financial services, it drives on innovative ideas that lead to the provision of high quality protocol work.

Its tie- ups with the front-runners in the specific domains that it entails,has acted as a catalyst to strengthen its business by offering it a clearer insight on the same and explore new opportunities. ICS Group has partnerships with international domain leaders like Old Mutual Property, South Africa for property development and management, Bentel Associates, South Africa for architectural business,  Mantis International, South Africa for hospitality in the boutique luxury space and Secure Parking, Australia for car park management.

ICS Realty in conjunction with Old Mutual Property (South Africa), successfully promoted a FDI compliant real estate fund for India. The corpus raised and fully deployed was US$ 70 mn. The Group is looking at promoting more such products for India