Mall developer Phoenix Mills posted a 140% year-on-year jump in net profit in the fourth quarter of FY23 on the back of a 47% rise in net sales. Apart from opening new malls, the company is also building office and warehousing properties. Managing director Shishir Shrivatsava discusses the company’s plans and outlook for different real estate segments in an interview with Raghavendra Kamath.
How many new malls will be operationalised in FY24?
Two new malls will be operationalised in FY24— Phoenix Mall of Asia, Hebbal, Bangalore and Phoenix Mall of the Millennium, Wakad, Pune.
You have 5.1 million sq ft of office properties coming up. Do you expect any headwinds due to recession in Western economies ?
The demand in each micro market is different. In Bangalore, the demand is for larger office spaces and there are tenants who are looking to occupy an entire tower or even two towers. Their requirements range from 100,000 sq ft going upwards to around 1 to 2 million sq ft from a single tenant. In Pune, the demand is more in the range of 100,000 to 200,000 sq ft from both Indian corporates as well as multinational clients.We are also engaged actively across our under-construction assets in Bangalore and Pune where leasing enquiries from marquee MNC clients have been very strong.
Analysts have said Phoenix expects to achieve Rs 11,500 crore in consumption with a growth of 25% this year. Can you elaborate?
During FY23, we witnessed the highest ever annual consumption of ~` 9,300 crore, demonstrating a growth of 33% over FY20. We have an outlook to reach up to `11,500 crore of consumption in FY24, which includes all our existing 10 operational malls. Excluding Phoenix Citadel Indore and Palladium Ahmedabad, we expect the consumption to be Rs 10,300-10,500 crore on a like to like basis. Of this, Phoenix Citadel, Indore and Palladium, Ahmedabad are expected to together contribute to ~`1,200 crore of consumption.
Our FY24 outlook is based on the expected sustained consumption growth in existing malls, additional consumption on account of increase in trading area at Kurla, Bangalore, Chennai and Pune and consumption growth in our latest malls – Phoenix Citadel, Indore and Palladium, Ahmedabad demonstrating a significant upward trend.
Further, we expect some uptick in consumption from the launch of Phoenix Mall of Asia, Bangalore and Phoenix Mall of the Millennium, Pune during FY24, which has not been considered in the numbers above.
Phoenix bought 33 acres in Sohna, NCR, to develop 1-million-sq-ft warehousing properties . Do you also have other plans for warehousing in future?
During the pandemic, we witnessed the benefit of diversification in the portfolio, as we had cash flows coming in from residential and commercial office verticals during that time. Now, with normalisations of business across verticals, we remain conscious that diversification could hold the key in case of any such event in future. Warehousing, which is a Covid-neutral asset class, seems to be a logical extension for us because of our demonstrated ability to identify suitable land parcels, expedite acquisitions, secure all approvals in a timely manner, meet project turnaround and delivery timelines. We have strong financial partners, on both equity and debt fronts, existing relationships with retailers, and a deep understanding of what drives discretionary spend in key catchments of India given our on-ground retail presence. We are already present in markets such as Indore and Lucknow where there is a lot of demand for warehousing spaces from our retail partners.
We are currently looking at Sohna as a pilot project in warehousing, purely because of buoyant movement in that micro market for warehousing developments. Meanwhile, we are also looking at other opportunities across India and depending on our experience from the pilot project, we will decide on the way ahead with respect to the pipeline of projects available at that point of time. Business development activities are ongoing with a dedicated team for this vertical.
What is your outlook for residential properties in FY24?
We are witnessing very good traction in terms of residential sales mainly led by robust demand of ready to move in inventory and faster conversion. We achieved overall sales of `466 crore in FY23 and collection for the fiscal was Rs 369 crore. Residential sales remain robust in April and we have a positive outlook for FY24 for this segment. We will be in a position to give more colour on this, post-closure of Q1 FY24.
Managing director Shishir Shrivatsava discusses the company’s plans and outlook for different real estate segments in an interview with Raghavendra Kamath.
