Latest Property News on 'Bangalore'

Westcourt sells 25-30% Four Seasons’ residence apartments

Westcourt, which is developing Four Seasons hotel and private residences in Bangalore, has already sold 25-30 per cent of the first block of residences on offer. “The hotel wing of the project has 48 residences comprising one-bedroom and two-bedroom apartments which we have opened up for sale. We have already sold 25-30 per cent of this,” Mr Vinay Kapoor, Founder and Chief Executive Officer, Westcourt, told Business Line.

The price tag for these one-bedroom and two-bedroom apartments could be anywhere between Rs 4 crore and Rs 7 crore. The residences would be serviced by the project’s hospitality operator, Four Seasons. Cityview, the Rs 1,500-crore project which would have commercial, retail, hospitality and residential developments, would also offer larger private residences.

These larger units would be located in a separate wing — North Tower. There would be about 60 such large units — three- and four-bedroom units — would be priced between Rs 6 crore and Rs 12 crore. Those who have bought into are “large corporates including MNCs, non-Bangaloreans, who come to the city on work, and jet-setting Bangaloreans,” said Mr Kapoor. However, he said that there are several more enquiries from Bangaloreans for the larger units. He added that the company was not aggressive on sales, and didn’t expect “sales to be all pre-sales and expect it to happen over the next 2-3 years”.

Westcourt would also look at developing other projects across the country “when we get into the final stages of this project”, he explained.
The company would also start discussions with retail players for the retail space in the near future. The project would be completed by 2014, said Mr Kapoor.

Source: http://www.thehindubusinessline.com/companies/article2964289.ece

Bangalore emerges as safest property market

During the year 2011 when almost all other matured property market witnessed dip in transaction and price correction was on everyone’s lip, Bangalore registered both healthy transaction as well as upward price movement. While the home loan interest rate hikes are dampening the property market in other parts of the country, sales are steady in Bangalore because there has been substantial wage inflation too.

Bangalore typically has first home-buyers in the 27-35 years of age. “Younger home-buyers are willing to take the rate hike,” says Archana S. Bhargava, Executive Director, Canara Bank.

Some property analysts believe Bangalore is possibly the safest location for investments in the world. Prices do not skyrocket or get hyped here and they do not go downwards too like they have in many other prominent locations in India. This is because Bangalore is a market where most of the property purchases are by end users and not speculators. Speculators treat it as a pure investment for financial gains.

A leading real estate company conducted a study on the pattern of first purchases (purchase straight from developer) by end-users. The study found a surprising and comforting factor that 81.2 percent of first purchases in Bangalore were by end-users and not speculators or investors who look for just financial returns. This figure in locations such as Mumbai could be as low as 40 percent.

The advantage of end-users buying more is prices do not appreciate or depreciate at abnormal percentage across the city. This is comforting factor for a homebuyer since the prices would be stable and would move upwards or downwards within a small band. Even during the recession, the salability in Bangalore property was quite visible. Also, the market here is not driven by economic sentiment in some other parts of world but by the actual demand and supply situation in the particular location where the project is located.
Bangalore real estate has, of late, seen a spate of transactions where high networth investors (HNIs) have scooped up fixed rental income assets. Traditional business families from Kolkata and Uttar Pradesh, who in the past financed developers in cities like Chennai, have moved their capital in Bangalore in recent years. A Kolkata-based investor has acquired 2.17 lakh sft of commercial space from Embassy Property Developments for Rs 141 crore. The office space at Embassy Paragon in Bangalore’s IT suburb Brookefields is occupied by tech giant Intel.

The Silicon Valley of India is also witness to more and more land being dedicated to the establishment of tech parks and commercial real estate Grade-A office space. According to global workplace solutions provider Vestian CEO (Asia Pacific) Shrinivas Rao, “In the last five years, around 50 million sq ft of commercial real estate Grade-A office space has been absorbed, out of which more than 75 per cent has been taken by IT/ITeS.”

Bangalore has also seen an escalation in rents of residential apartments during Q2’11 (April-May-Jun-2011) over Q2’10, according to the real estate portal 99acres.com. The rate of appreciation differs in each micro market but most localities have witnessed double digit growth.

“The commercial property prices in Bangalore are more affordable compared to those in NCR and Mumbai. Tenants here are more stable and pedigreed, given the dominance of the IT industry. And these are huge positives for HNI investors,” says Anuj Nautiyal, Executive Director, Redwoods Capital, a real estate brokerage and asset management firm.

He reckons that Bangalore may now be the top metro in terms of HNI transactions by volume even though Mumbai and NCR would outstrip it by value. Standard Chartered Bank, Kotak Mahindra and ICICI Securities are pushing Bangalore’s commercial real estate story to their private banking clients and often syndicating deals on their behalf for 10-12% annualized return. The city’s realty is seen as more competitive and open, which often enables investors to wrest better deals.

Now that metro rail has zoomed across Bangalore, the real estate industry in the city is also seeing property prices zoom. From Old Madras Road to Byappanahalli, realty has zoomed up by the sq ft – from Rs 3,000 to Rs 6,000 per sqft. Developers as expected are now rushing to start projects along the first phase of metro. What is getting property developers really excited is the second phase of Bangalore metro which will be launched in December 2012. This phase will connect most suburbs to the commercial hubs of the city. Property prices in these areas are increasing by 10 to 15 per cent in anticipation of the metro.

Real estate prices along the Metro will follow the same pattern as in Delhi where prices shot up by 15% to 20%, says Sushil Mantri, CMD of Mantri Developers.

Namma Metro MD N Sivasailan says, “In fact the people who protested are now the biggest champions of the metro, they are happy that business is booming.”

Irfan Razack, CMD of Prestige Group says the action has moved from downtown to the suburbs. Metro connectivity to areas like Kanakapura and Mysore Road will see a lot of realty traction. Hence, price escalation on the periphery is sharper than in the Central Business District.

Moreover, with the value revision coming into effect, most localities in Bangalore could see an upward revision of 15-20 per cent in property values. This is likely to impact property-buying in the city.

No wonder, large industrial houses such as the Tatas, L&T, Godrej, Murugappa, Mahindra & Mahindra etc have established presence in the real estate sector here, and the Coimbatore-based LMW and Lakshmi Mills also are gearing to enter. This makes Bangalore the most sought after property market. Mumbai-based Godrej Pro­perties (GPL) has already launched three projects in Bangalore.

As S.S. Asokan, Executive Director, Shriram Properties says, “The presence of reputed corporates in the real estate sector provides an assurance of quality to real estate projects and the buyers are the biggest gainers from their entry.”

Advantage Bangalore
Healthy transaction & upward movement
No boom-no bottom market
HNIs choice
Bullish corporates
Metro connectivity to periphery

Source: http://www.track2realty.com/bangalore-emerges-as-safest-property-market

Jalahalli, still a green haven

Bangalore has some beautiful sectors and one of them is a wonderful pocket called Jalahalli between NH 7 and NH 4, which is basically the Tumkur and Bellary highways.

Located in the northern quadrant of Bangalore, it is by far one of the greenest areas to live in right now. It is split into Jalahalli East and Jalahalli West. What connects the two areas is Gangamma Circle which also brings together Jalahalli Village and Cross.

Real estate is constantly under scrutiny here and a number of areas are being tapped for the opportunity they present.

Mahesh Khaitan, Head of Sattva Real Estate Solutions, Market Research Wing says, “Most of the available area in Jalahalli has been taken up by the Defence sector but there is increased importance being given to connectivity projects which will make Jalahalli even more accessible to the main City, thereby increasing its potential.”

The eastern part of Jalahalli was home to several industry majors such as the BEL, HMT, CMTI and other public sector units. A number of privately held industries also had their outlets located here. The Jalahalli East Air Force station finds a place between Gangamma Circle and MS Palya which further goes on to connect to Vidyaranyapura. Vijay Murugan, Manager, Residential Services, Jones Lang LaSalle India says, “The USP of Jalahalli has always been its natural ambience, its greenery, etc .

Geographically, more than 70 per cent of the land belongs to HMT factory and the defence set-up, which helped to retain the greenery for so long. Prices for homes are in the affordable segment range between Rs 25 lakh and Rs 40 lakh. Since Jalahalli is closer to the Peenya Industrial area, the majority takers will be of the blue collared profile.”

T M Sateesh, Managing Director, Hoysala Builders says, “When the HMT factory shut down, it sold the land of several units to private developers. Thanks to this, there are a number of properties that have come up in this area.” For the area, the tallest structure is probably by Tata Housing and will stand at 33 floors, he adds.

Jalahalli West is primarily a residential area. “One can enter the Jalahalli area via Cox Town and Banaswadi which is effectively around four-five km away. These are high-density areas with narrow roads leading to Jalahalli.

However, once you are there, you will find that the internal roads of Jalahalli are of good quality and amply wide. The standard of living here, explains Mahesh is rather nice, with large open spaces being available in between houses,” says Mahesh Khaitan.

From the commercial and retail aspect, Vijay explains, “Jalahalli Cross is the nearest commercial hub for the area and there is no organised retail or commercial buildings that have been constructed yet. Some brands did try constructing a commercial building near the HMT factory, however the response is to be ascertained.”

Infrastructure is rather good in the area with connectivity being worked on. Water availability at the ground level is great. Thanks to the arrival of the international airport, more attention is being paid to Jalahalli and its development.

Several apartment complexes of numerous brands are coming up in the surrounding pockets to make space for the floating population that seems to have come in. The hustle and bustle of the CBD area is yet to affect this part of town.

Source: http://www.deccanherald.com/content/224062/jalahalli-still-green-haven.html

Embassy Group launches Boulevard

Embassy Group launches Boulevard

Just 12 km from the new Bangaluru International Air­port, the new project by Em­bassy Group, Boulevard, at Bellary road will give you a break from the city’s crampy heart. The luxurious high-end villas meant for high net worth individuals will be ready by the end of 2014.

The Embassy Boulevard along with Embassy Lake Terraces simultaneously bagged by Synergy Property Development Services, a project management and consulting company, from Embassy group would have a total investment of Rs 1,239 crore. Synergy would hand over the project on a turnkey basis to Embassy.

The price of villas will range from Rs 5.5 crore to Rs 12 crore. All villas would be of G+ 2 structure, which will be three-storied buildings with 170 villas in a 50 acres area. The villas will have five categories — pine, willow, cedar, silver oak and cypress. It will have facilities such as a club house with recreational facilities, landscaped parks, open play areas, well planned road networks, existing open nala with landscape enhancement, among others.

The size of these villa ranges from 3,935 sq ft to 7,310 sq ft and will have a foyer, well- designed living area, family lounge, study room and attached toilets. The amenities would include – private swimming pool, outdoor terraces plus barbeque, gym, spa and sauna, two covered parking, kitchen, dining, utility yard, maids’ room and toilet. Instead of compound walls for individual villas, gabion walls and cut granite feature walls are used as visual barrier.

Embassy group, director and chief executive officer, Gopi Krishnan, said, “We opted for Synergy because of their sheer dedication, commitment, technological excellence, competitive pricing with the assurance of timely delivery, backed by a world class team of highly skilled professionals”.

The project is likely to be a green home certified villa unit development. The villas will have features such as large over hangs, sunscreen louvers, double glazed windows, highly insulated roofs.

Source: http://www.mydigitalfc.com/real-estate/embassy-group-launches-boulevard-039

Century Real Estate to set up Rs 100 crore VC Fund

Century Real Estate to set up Rs 100 crore VC Fund

Bangalore-based property firm Century Real Estate Holdings is setting up a venture capital fund with a corpus of around Rs 100 crore.

Century will initially raise money from family and friends and later tap the larger investor community, said a person familiar with the development.

The fund will invest in pre-development of land owned by Century across south India, where the real estate company will have control over development rights.

Century declined to comment on the proposed fund. Further details on the fund were not immediately available.

Last year, the developer had raised Rs 370 crore in three tranches through non-convertible debentures from Kotak Realty Fund and JM Financial, a non-banking finance company. The company had also raised around $200-million from Goldman Sachs during the slowdown of 2008-09.

Century Group, owned by real estate veteran Dayanand Pai, will be the latest real estate company to set up a fund. Construction giant Shapoorji Pallonji had floated a $500 million private equity fund, mainly focused on real estate. The company had managed to raise $250 million to invest in development of projects for the group and also for third party projects.

Other real estate companies, like Hubtown, earlier known as Ackruti City, and Kolte Patil had tied up with foreign partners to set up their own funds but have been unsuccessful in raising money. Ackruti City had roped in Pacifica Fund and Beekman Helix as partners for its maiden Rs 500-crore real estate venture fund and Kolte Patil had tied up with Portman Holdings to raise a $500-million fund.

“Fund raising would be a big challenge unless there is a proven track record as investors are not looking at India as a healthy asset class. From limited partners perspective, differentiation in terms of strategy and ability to source deals will be vital elements that are being closely scrutinised,” said Ambar Maheshwari, managing director, corporate finance at Jones Lang LaSalle.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/century-real-estate-to-set-up-rs-100-crore-vc-fund/articleshow/11635529.cms

Bangalore realty change rides on metro

Even as the Metro rail chugs on its way up the popularity chart in Bangalore, the government has approved the second phase of ‘Namma Metro’. The 72-km Phase II of Metro will come up at an estimated Rs 27,000 crore, and is expected to be completed by 2017.

Will the coming of the Metro churn — or even marginally touch — the real estate market scene as it did the Capital?

Mr V. K. Sharma, Director and Chief Executive, LIC Housing Finance, at a recent event in Bangalore, said that he expected the metro train service to transform the city in the next three years. He explained the case of how Delhi went through a similar experience after the metro service was started there. Real estate analysts point out that the peripheral property markets in areas like Gurgaon sky-rocketed, thanks to the Delhi metro.

PHASE 1
In October 2011, a 6.7-km stretch between Baiyappanahalli and M G Road, with six stations, was inaugurated. The stretch is Metro’s ‘Reach 1′ part of the East-West corridor of the first phase. Phase I will see a 42.3-km network, 8.8 km of which will be underground on the East-West (Baiyappanahalli to Mysore Road) and North-West (Hesarghatta to Puttenahalli) corridors with 40 stations. The first phase is expected to be completed by December 2013.

The second phase will see extension of all reaches on the two existing corridors, east-west and north-south. Besides, two new lines — from Jayanagar to Electronics City, passing through Jayadeva Hospital, BTM Layout and Silk Board, and the other from Nagavara to Gottigere, passing through the Indian Institute of Management, Bangalore — would also come up.

In a significant move, that will ensure that this public transport would serve the IT population of this city in a better way, the east-west corridor would be extended up to Whitefield in the east, and Kengeri in the West. The north-south corridor would now be extended up to the Bangalore International Exhibition Centre in the north, and up to Anjanapura township in the south.

It has to be noted that Phase 1 of the project doesn’t cover the IT hubs of the city. That route would have helped it address the city’s infamous traffic woes in a better way. A real estate developer pointed out that Phase I of the metro doesn’t cover those city locations where IT offices are located. Currently, Reach 1 of the Metro has made no difference to the everyday traffic woes of the areas it serves, he said.

IT CORRIDORS

The city’s working population predominantly belongs to the IT/ITeS sectors, and most of the IT/ITeS offices are located in locations such as Outer Ring Road, Electronics City, Whitefield, and Bannerghatta Road. Extending this infrastructural project to include the IT corridors of the city would not only make commuting to office much easier and faster for the city’s working class, but would also help de-congest the fully-blocked roads.

As has been the experience so far with the Metro, the commute between the now-operational Baiyappanahalli and MG Road doesn’t take more than 9 minutes. That very road, at peak-hour traffic, would take anywhere between 30 and 40 minutes (at the minimum), while commuters can cover the distance in around 25 minutes during non-peak hours.

However, not all are convinced that the metro service in Bangalore has made any significant impact to the city’s real estate market, as was expected. “The metro service so far hasn’t been an attraction to the real estate market because the first phase doesn’t offer the desired connectivity,” said Mr Naresh Dandapat, a real estate analyst. He pointed out that on the eastern corridor, a stretch till Baiyappanahalli doesn’t make any significant difference to the property market in Whitefield now, despite both these locations being on Old Madras Road. “In future, when the second phase connects to Mysore Road and Whitefield, peripheral areas would see a better demand,” he added. A timely conception and execution of the project would have helped both existing property owners and developers planning projects in the areas. The real estate market, at its current growth rate, would outgrow the reach of the metro in five years’ time, explained Mr Dandapat.

“Though comparisons are made, it has to be noted that the Delhi metro was opened at the right time. Had Bangalore Metro offered the connectivity to Whitefield now, it would have helped the micro-market’s real estate values better than five years from now,” he explained. Between 2009-10 and 2011-12, the micro-market has seen a 16 per cent growth in property prices, said Mr Dandapat.

The metro train service is expected to transform the city in the next three years, making property markets skyrocket.

Source: http://www.thehindubusinessline.com/todays-paper/tp-investmentworld/article2821145.ece

Private equity funds like Kotak Realty Fund, Redfort Capital and IL&FS plan to exit large township projects

BANGALORE/KOLKATA: Private equity funds are trying to exit their investments in large integrated township developments where the projects have been stuck for lack of demand or clarity on approvals.

PE funds like Kotak Realty Fund, Redfort Capital and IL&FS, whose township projects have been stuck since they invested a few years ago, are now changing their investment strategies and are focussing on investing in short term, small format projects which will be completed in three to four years at the most.

“Township projects today offer limited scope. We now want to invest in projects spread over two-four million square feet with a smaller average ticket size of 100-250 crore,” says V Hari Krishna, director, Kotak Realty Fund.

In 2008, the realty fund from Kotak had invested in a 125-acre residential township project with Bangalore-based DivyaSree Developers in Chennai which was expected to start early this year. The fund had also picked up a 28% stake for 270 crore in Aavisa – an integrated township project being developed by IVRCL Assets & Holdings.

Redfort Capital’s three-year-old investment in two township projects promoted by Prestige Estates is in the process of aggregating land.

Integrated townships were the first category in real estate in which foreign direct investment was allowed by the Indian government in 2005. Private equity funds have invested $1.5 billion in township projects since 2006, says property consultancy firm DTZ.

“In 2007, integrated townships seemed to be the preferred investment option for private equity players in India due to their diversification benefits and low entry cost. But now many such investments are stuck due to execution and approval delays,” said Rajeev Bairathi, director, investment advisory at DTZ India.

London-listed Trinity Capital, whose investments are now managed by Indiareit Fund Advisors, has exited Rustomjee Evershine Global city township project by selling its 23% stake for 48 crore. It has also exited Rustomjee Group’s 127-acre integrated township in Thane by selling 16% stake to Keystone Realtors.

Source: http://economictimes.indiatimes.com/markets/real-estate/realty-trends/private-equity-funds-like-kotak-realty-fund-redfort-capital-and-ilfs-plan-to-exit-large-township-projects/articleshow/11519359.cms

Mangalore real estate developers seek funds

The real estate developers’ body in Mangalore has urged bankers not to compare them with developers in mega cities while extending funds to them.

Speaking at the inauguration of a home loan fest, organised by the State Bank of India (SBI) here on Saturday, Mr P.M.A. Razak, Chairman of Mangalore chapter of CREDAI (Confederation of Real Estate Developers’ Association of India), said loan sanctions are not materialising because bankers compare them with their counterparts in metros.

Stating that NPAs or sub-standard assets are unlikely in Tier-2 and Tier-3 centres in the country, he said a major portion of the present NPAs in real estate sector is by a handful of big developers in the metros .

He said a major portion of the local economy in Mangalore is driven by the real estate sector, as the city lacks mega industries and investments in IT (information technology) sector. More than 65 per cent of jobs for un-skilled workers in the region are generated by the real estate sector, he said.

In such a situation, banks should help the real estate sector by extending adequate funds to them, Mr Razak said.

Inaugurating the fest, the Karnataka Minister for Ports, Mr Krishna Palemar, said home loan and car loan ‘utsavs’ like this would help customers own their dream house/car. Added to this, such loans will also help boost the growth of the city.

Source: http://www.thehindubusinessline.com/industry-and-economy/economy/article2803864.ece?homepage=true&ref=wl_home

Bangalore realty retains10th rank for investment

Bangalore has retained its tenth rank among the most favoured real estate investment destinations in the Asia Pacific region. A study on emerging real estate trends in the region by PricewaterhouseCoopers (PwC) and Urban Land Institute had ranked the city tenth last year also.

Bangalore’s organic, growth-driven market and ability to buck mega trends has helped it retain its credentials as a stable play and maintain its position on the list, the report said.

The survey is based on the views of over 360 internationally known real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants.

MUMBAI, DELHI SLIP

Rising economic and inflationary pressures saw Mumbai and New Delhi fall from third and fifth place in last year’s list for investment opportunities to 15th and 12th position respectively in 2012.

Vacancy rates in Mumbai are likely to remain stable through the close of 2011 and into 2012. Absorption will be positive next year, but rental values remain questionable as economic and inflationary issues continue to linger.

In New Delhi, inflation has continued to spike costs, and it may not be economically feasible to build there. Ongoing funding problems do provide investment opportunities for private equity investors, the researchers said.

LATENT DEMAND

On the current scenario in India, Mr Jai Mavani, Leader – Infrastructure and Real Estate, PwC India, said, “In the medium term there is a secular steady state trend given India’s favourable demographies. Even post 2009, when the real estate markets were bottoming out in India, there were bursts of demand at every price correction. This clearly demonstrates latent demand. However short-term pain is here to stay until the regulatory processes get streamlined, approvals resume, interest rates improve and more liquidity gets introduced.”

However, the long-term solution can only come through reforms – both regulatory and financial. The real estate regulation Bill is a step in the right direction although the content needs some tweaking to prevent over regulation.

Further, it is time for the Real Estate Investment Trust (REIT) regulation. Only then long term retail money can flow in and enable circulation of capital. Besides Pension funds and insurance companies (as it is done globally) should also be allowed to invest in long term income yielding assets with quality tenants, he said.

ATTRACTIVE OPTION

With the market expecting to bottom out sometime in the last quarter of this fiscal, debt funding drying up and recession expected to cut inflationary pressures on commodities, it will translate into attractive investment option for private equity players looking to get India back on their agenda.

With sales volumes stagnant and rising labour and commodity prices also squeezing finances, developers also are now expected to turn to private equity funds as a last resort. Incoming capital is expected to rise in the following year. If it does, it will represent a significant turnaround for a market that foreign private equity investors have largely shunned since the onset of the global financial crisis.

Source: Hindu

Luxury Brands Prefer Heritage Homes over Five-Star Hotels

Heritage homes are fast becoming the favourite hunting grounds of luxury brands scouting for premium retailing space in India, where suitable high-end malls are too few and the sales potential at five-star hotels is still uncertain. When designer wear brand Kimaya Fashions searched for a store in Hyderabad, it settled on a 16,000-sq ft bungalow in the upscale Jubilee Hills, in a property with floor area nearly three times the size of its average outlets. French luxury brand Hermes also moved into a Victorian property in Mumbai’s Horniman Circle to retail its popular Birkin bags.

“It’s not necessarily out of choice,” says Pradeep Hirani, managing director of Kimaya Fashions, “This is the only way to expand presence in India because of the limited options.”

While luxury brands are aggressively looking to expand footprint, real estate developers have shied away from building high-end malls. So, instead of waiting for luxury infrastructure to develop, such companies are seeking out heritage properties.

Multi-brand store Kitsch run by TSG International, which retails brands such as Alexander McQueen, Moschino and Stella McCartney, touched operational break-even in less than six months when it opened a standalone outlet in Mumbai’s Kala Ghoda area. In contrast, its outlet at luxury mall DLF Emporio in New Delhi took over a year to do so.

Besides turning to heritage homes, luxury brands are also beginning to share space with brands that are a notch lower in prestige sweepstakes. Industry observers say this is a smart move because Indian consumers may buy luxury products in one category and premium in others. “It is not a question of where but how many stores a luxury brand opens that dilute its brand value,” says Amit Bagaria, chairman of retail planning consultancy Asipac Projects.

Genesis Luxury, which has partnered brands such as Jimmy Choo and Bottega Veneta, experimented by opening a store for Italian menswear Canali at Mumbai’s Palladium mall. “There were high risks of adjacencies,” says Deepika Gehani, creative head of Genesis Luxury, referring to neighbours such as DKNY and Zara, which are international brands but not classified as luxury.

Internationally luxury brands always retail alongside those of similar positioning,” says Gehani, but points out that the departure from strategy in India has worked. The Canali store at Palladium generated close to 100% higher sales within three months of launch than its outlet at JW Mariott in the same city.

In Chennai, too, Genesis Luxury opted for Express Avenue, a mall which has a mix of brands such as Levi Strauss and Biba as well as the superpremium brand Diesel. While it opened a standalone outlet for Burberry, it clubbed its other brands under a format called Luxxe Box.

Or take Tag Heuer, the world’s fourth-largest Swiss watch maker, which opened a 600-sq ft store in Bangalore’s Phoenix Market City mall next to the Spanish premium brand Mango.

“We need a flexible footprint to develop retail space,” says Manishi Sanwal, general manager at LVMH watch & jewellery, which owns TAG Heuer. Higher footfalls have meant sales of 15 watches per month against 10 watches a month in hotels.

Genesis Luxury’s Gehani says the brand retains its exclusivity by not partnering high street brands in the mall for marketing promotions. Since luxury high streets such as New York’s Fifth Avenue and Madison Avenue or London’s Bond Street are absent in India, most luxury brands chose to open their outlets in five-star hotels.

Real estate consulting firm Cushman & Wakefield says such hotels across cities such as Mumbai, Delhi and Bangalore account for as much as 80-90% of luxury retail space in the country. Footfalls have, however, been lower in hotels than in malls because most guests at hotels shop overseas and head for the restaurants and bars. Malls and standalone luxury outlets have been a comparatively bigger draw.

While a luxury mall seeks rentals of . 550-600 per sq ft, standalone outlets and malls with a mix of high street brands get offered up at half the cost. “Rentals are 10% of the sales of luxury brands globally and we are able to achieve that in India by experimenting with location,” says Priya Sachdev, creative director and COO of TSG International.

The cost of creating an ambience and generating footfalls per sq ft is however higher in a standalone property, says Hirani of Kimaya Fashions, which is planning to open a cafe, spa and art gallery at its Hyderabad outlet. The company will look at a similar model at its Habibullah Estate store, a heritage property in Lucknow. “It’s not just about retailing a product. We are actually selling an ego massage or a great experience,” says Hirani.

New Homes For Luxury Brands

Real estate is a huge challenge for luxury retail as the infrastructure is not as developed as China and other parts of the world

Most often five-star hotels have only two luxury brands but marketers say hotels need at least 12 brands to draw footfall

Rentals are 50% cheaper at standalone properties and mainstream malls as against 500-600 per sq ft in luxury malls

Luxury brands are also tying up with spa, café, restaurant and art galleries to create a luxury destination in standalone outlets

Assured footfalls lead to faster break even in standalone outlet Designer wear brand Kimaya Fashions recently opened a store in Hyderabad — a 16,000 sq ft bungalow in the upscale Jubilee Hills, in a property with floor area nearly three times the size of its average outlets French luxury brand Hermes moved into a Victorian property in Mumbai’s Horniman Circle to retail its popular Birkin bags

Multi M -brand store Kitsch run by TSG International, which retails r brands such as Alexander McQueen, Moschino and a Stella McCartney, touched break-even in less than six s months at its outlet in Mumbai’s Kala Ghoda area

Genesis Luxury opened a store for Italian menswear Canali at Mumbai’s Palladium mall. The Canali store at Palladium generated close to 100% higher sales within three months of launch than its outlet at JW Mariott Tag Heuer, the world’s fourth-largest Swiss watch maker, opened a 600-sq ft store in Bangalore’s Phoenix Market City mall. Higher footfalls have meant sales of 15 watches per month against 10 watches a month in hotels

Source: http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fashion-/-cosmetics-/-jewellery/luxury-brands-like-kimaya-fashions-hermes-and-others-prefer-heritage-homes-over-five-star-hotels/articleshow/11442214.cms