Runwal has bought out Singapore’s sovereign wealth fund GIC’s entire 50% stake in their joint retail property R City Mall for around Rs 1,000 crore to get complete control of the asset in Mumbai’s Ghatkopar suburb, said persons with direct knowledge of the development.
The transaction is one of the largest single property acquisitions in the Indian retail industry.
The deal marks GIC’s exit with returns of over 4 times while valuing the 1.2 million sq ft retail asset at over Rs 2,000 crore. GIC also received additional returns through the rental revenues since 2009, when the mall started its operations.
In 2006, Runwal partnered GIC for its flagship mall R City and this was one of the first Foreign Direct Investment (FDI) in the Indian real estate sector. The partnership started as a Greenfield project, with GIC infusing funds worth over Rs 250 crore for the 50% stake in the joint entity.
“We are humbled to be able to deliver such superior returns to our partners. With this deal, the company is embarking on the next chapter of complete ownership of R CITY mall. Our efforts to ensure the best experience to customers has also led to solid returns to our partner,” Sandeep Runwal, managing director, Runwal Developers, told.
Runwal, however, declined to comment on the exact size and specifics of the deal.
Retail properties in India have been witnessing steady growth in investments led by robust rise in consumption for the last few years especially after the pandemic.
“Retail malls in India do not just signify a shopping destination, they are more recreational in nature and have rooted themselves in our diaspora. Increased trading densities even at lower footfalls in comparison to pre-pandemic levels demonstrates the same. We expect this asset class to remain buoyant and attract large capital flows from investors and developers alike,” said Nishant Kabra, India Head, Retail Capital Markets, JLL.
Interestingly, the deal has been concluded at a time when India’s maiden retail assets-led Real Estate Investment Trust (REIT) Nexus Select Trust is getting ready to be listed on bourses.
Institutional investments in quality retail assets have recorded 6 times growth in 2022 as against 2021 and these inflows are expected to be around $1 billion in 2023. Vacancy levels for graded assets are currently at 3-year low, while leasing activity is at 3-year highs with consumption and footfalls exceeding pre pandemic levels, showed data from JLL India.
According to the data, retail space absorption levels in 2023 across Grade A malls is estimated to be around 6.5 million sq ft as against 9 million sq ft expected supply.
R City is one of Mumbai’s biggest shopping and leisure destinations with over 300 Indian and International brands across fashion, food, beverage, and entertainment. It has been operational for over 13 years and has recently undergone renovations to offer a premium shopping experience in line with international standards.
The mall recently collaborated with Tata Power to install EV chargers throughout the premises.
The retail property has the largest recreation hub of the city with over 9 entertainment centres including India’s first and largest indoor theme park Kidzania. R CITY also has the first and only in-mall format of IKEA which spans across 72,000 sq ft.