Market Research & Feasibility Study for Retail Mall at Kolkata Market Survey & Demand Assessment Study
TABLE OF CONTENTS
1.0 EXECUTIVE SUMMARY ...... 5
BACKGROUND ...... 5 OBJECTIVE ...... 5 SCOPE OF THE REPORT ...... 5 APPROACH & METHODOLOGY ...... 5 MARKET ANALYSIS & DEVELOPMENT OPTIONS ...... 5 2.0 CITY OVERVIEW ...... 6
2.1 INTRODUCTION ...... 6 2.2 DEMOGRAPHICS ...... 6 2.3 ECONOMIC INDICATORS ...... 7 2.3.1 GDP overview ...... 7 2.3.2 Income overview ...... 8 2.4 ECONOMIC BASE AND DRIVERS FOR THE CITY ...... 8 2.5 EXISTING & UPCOMING INFRASTRUCTURE ...... 12 2.5.1 Existing Infrastructure ...... 12 2.5.2 Upcoming Infrastructure Initiatives ...... 14 3.0 KOLKATA REAL ESTATE OVERVIEW ...... 15
3.1 RETAIL ...... 15 3.1.1 Existing Stock ...... 15 3.1.2 Existing Scenario & Future outlook ...... 17 3.2 EXISTING & POTENTIAL GROWTH CORRIDORS ...... 18 4.0 SITE AND LOCATION ANALYSIS ...... 20 4.1.1 Location map ...... 20 4.1.2 Distance chart ...... 20 4.1.3 Accessibility & Neighborhood ...... 20 4.1.4 SWOT analysis ...... 21 4.1.5 Initial Development Proposition ...... 21 5.0 MICRO MARKET OVERVIEW ...... 22
5.1 INTRODUCTION TO MICRO MARKET ...... 22 5.2 KEY DEVELOPMENTS ALONG EM BYPASS ...... 22 5.3 RETAIL ...... 23 6.0 PROJECT ANALYSIS ...... 24
6.1 DEMAND ASSESSMENT ...... 24 7.0 FINANCIAL ANALYSIS ...... 25
7.1 ASSUMPTIONS ...... 25 7.1.1 Area Assumptions ...... 25 7.1.2 Project Development key dates ...... 25 7.1.3 Project Structure Assumptions ...... 25 7.1.4 Construction cost ...... 26 7.1.5 Other cost assumptions ...... 26 7.1.6 Land development cost ...... 26 7.1.7 Revenue assumptions...... 26 7.1.8 Phasing assumptions ...... 26 7.1.9 Project Returns ...... 26 7.1.10 Project Balance Sheet...... 1 7.1.11 Project P&L ...... 1 7.1.12 Project Cash Flows ...... 2 7.1.13 Project Cost ...... 1 8.0 CONCLUSION / RECOMMENDATION ...... 1 CAVEATS AND LIMITATION ...... 2 ANNEXURE 3 – SITE PHOTOGRAPHS ...... 4
2 Nov 2010
Market Survey & Demand Assessment Study
Index of Tables
Table 1: List of Abbreviations ...... 4 Table 2: List of Measurements ...... 4 Table 3: Projected Population Density in KMA in persons per sq. km.: Census 2001 ...... 7 Table 4: Economic indicators of Kolkata as on 2001-02 ...... 7 Table 5: Key Industries ...... 11 Table 6: Existing Infrastructure ...... 12 Table 7: Upcoming Infrastructure Initiatives ...... 14 Table 8: Existing malls in Kolkata ...... 16 Table 9: Upcoming Retail developments in Kolkata ...... 17 Table 10: Retail rentals in Kolkata ...... 17 Table 11: Distance chart ...... 20 Table 12: Location overview ...... 21 Table 13: SWOT analysis of property ...... 21 Table 14: Initial Development Proposition ...... 21 Table 15: Existing and Upcoming Malls in EM Bypass ...... 23 Table 16: Demand Assessment Table for Retail space ...... 24 Table 17: Construction cost assumptions ...... 25 Table 18: Land development cost assumptions ...... 25 Table 19: Land development cost assumptions ...... 25 Table 20: Construction cost assumptions ...... 26 Table 21: Other cost assumptions ...... 26 Table 22: Land development cost assumptions ...... 26 Table 23: Revenue assumptions ...... 26 Table 24: Phasing assumptions ...... 26 Table 25: Project Returns ...... 27 Table 26:Projected Balance Sheet ...... 1 Table 27: Projected Profit & Loss ...... 2 Table 28: Projected Cash Flows ...... 3 Table 29: Project cost summary ...... 1 Table 30: Detailed Cost Phasing ...... 5
Index of Figures Figure 1:Kolkata ...... 6 Figure 2: Growth in Working Population ...... 7 Figure 3: Sector-wise GDP contribution of Kolkata ...... 8 Figure 4: Infrastructure Map ...... 13 Figure 5: Kolkata Metro Expansion Map ...... 13 Figure 6: Operational and Upcoming Malls in Kolkata ...... 15 Figure 7: Map depicting the retail spread in Kolkata ...... 16 Figure 8: retail mall rental trend ...... 18 Figure 9: CBD and Growth Corridors ...... 19 Figure 10: Location Map ...... 20 Figure 11: Real Estate Developments along EM Bypass...... 23
3 Nov 2010
Market Survey & Demand Assessment Study
List of Abbreviations & Measurements
Abbreviations
Approx. Approximately
BHK Bedroom Hall Kitchen
BUA Built Up Area
SBUA Super Built Up Area
CBD Central Business District
FAR Floor Area Ratio
FSI Floor Space Index
Ft. Feet
Govt. Government
INR Indian Rupee
Km Kilometer
M Meter
RCC Reinforced Cement Concrete
Sq. ft Square Feet
Sq. m Square Meter
Table 1: List of Abbreviations
Measurements
1 Acre 43560 Square Feet
1 Hectare 2.471 Acres
1 Square Meter 10.764 Square Feet
1 Square Yard 9 Square Feet Table 2: List of Measurements
4 Nov 2010
Market Survey & Demand Assessment Study
1.0 EXECUTIVE SUMMARY
Background Cushman & Wakefield (C&W) has been appointed by Forum Malls Pvt Ltd to undertake Retail Demand assessment & feasibility study for setting up of Retail Mall on their property located adjacent to Science City on EM Bypass.
Objective The objective of this exercise is to: • To evolve a development strategy for the subject land parcel with value maximization objective
Scope of the Report The scope of the Report is as under:
• Assess the Kolkata real estate market and analyze demand for the retail development. • Arrive at optimum phasing and implementation strategy. • Assess financial viability of the proposed retail development.
Approach & Methodology A physical inspection of the subject site & market survey was carried out in the site location. Assessment of real estate trends in and around EM Bypass micro market was mainly based on interaction with local industry players and leveraging on C&W services knowledge base and networks. Secondary research covered the review of existing reports and studies including publications by government agencies; publications by research firms for statistical data; & publications by various industry associations.C&W also conducted a review of the dynamics of the Kolkata real estate micro-market in terms of the overall growth direction, existing and proposed development hubs, and the infrastructure initiatives in the region to establish the development framework for the subject property. Further, a detailed research exercise of the real estate market in Kolkata and perception studies were conducted to establish the project viability, project positioning, pricing and phasing strategy for the development based on market and financial considerations.
Market Analysis & Development Options The subject micro-market, EM Bypass has been analyzed – as relevant for various development components to understand the existing and proposed development patterns – for various real estate components. As a result of the detailed analyses, we are of the opinion that: The subject site is suitable for development large format destination mall. This segment has been witnessing demand, which is expected to continue in the long term. We have considered market dynamics of the surrounding micro markets; considering the demand expected to be generated by the subsistent residential population in forthcoming years, and given the size & nature of the development and various other factors such as location, accessibility, we are of the opinion that large format retail development on the subject land parcel is viable. This has been done in order to assess the market prospects for the proposed development. The study evaluates the subject property on various parameters such as location dynamics, competitiveness and demand prospects to ascertain/ assess the sustainability of the proposed development.
5 Nov 2010
Market Survey & Demand Assessment Study
2.0 CITY OVERVIEW
2.1 Introduction
Kolkata the capital of West Bengal is the main business, commercial and financial hub of eastern India and the northeastern states. The city is situated in the Eastern part of India on the bank of river Ganges and is the world’s 8th largest urban agglomeration. A city with one foot in its 300 year old heritage and a richly mixed culture, and the other forward to grab the best of today, Kolkata tends to be a city that delights – with stunning glimpses into a rich culture, history, with amazing oasis of natural beauty in the heart of the city.
Figure 1:Kolkata
2.2 Demographics
As per Census 2001, the Kolkata Metropolitan Area (KMA) houses a population of 14,720,000. Of this, nearly 4.7 million people reside within the Kolkata Municipal Area (KMC). The urban agglomeration Kolkata Metropolitan Area is 1851 sq. km. in size whereas the Municipal Area within this region is about 185 sq. km1. By 2025, the population in KMA is expected to be approximately 22 million. The present density of urban population of Kolkata is 24,760 persons / sq. km.
The following table provides a perspective of Kolkata’s existing and emerging demographics as stipulated in the Vision 2025 document:
Area/District 1961 1971 1981 1991 2001 2011 2021 Kolkata Municipal Area 16,740 18,813 20,891 22,273 23,149 25,257 26,620 (KMC) Hooghly 1,937 2,487 3,170 3,993 4,734 5,394 6,169
Howrah 4,234 4,591 5,805 7,429 8,604 9,606 11,056 Nadia 505 685 1,279 1,783 2,256 2,682 3,228
1 KMA (Kolkata Metropolitan Area) refers to the overall administrative area under KMDA (Kolkata Metropolitan Development Authority) which includes the core city within the KMC (Kolkata Municipal Corporation) and surrounding urban sprawl (outgrowth areas defined by the planning authority).
6 Nov 2010
Market Survey & Demand Assessment Study
North 24 2,964 4,256 5,687 7,415 9,385 10,742 12,498 Parganas South 24 1,008 1,465 1,821 2,430 3,201 3,590 4,191 Parganas Kolkata Metropolitan 3,817 4,651 5,666 6,826 7,950 8,914 10,045 Area (KMA) Table 3: Projected Population Density in KMA in persons per sq. km.: Census 2001
At present, the average literacy rate in Kolkata is 81.31%. The Age Sex Ratio in Kolkata is currently 956 females per 1000 males. The annual growth rate of population for Kolkata is estimated to be approximately 4%. In order to meet the demands of the growing city population, the Kolkata Metropolitan Development Authority has proposed a few satellite townships around the city. These large developments shall act as counter-magnets and help in effectively reducing the burden on the core areas of the city.
The working age population of the state is set to increase by 17 million by 2016, thereby leading to further
urbanization.
Working Age Population in million 30 25 20 15 Entering Workforce 10 5 0 2006 2011 2016
Figure 2: Growth in Working Population
2.3 Economic Indicators
2.3.1 GDP overview
Kolkata is a major economic centre of India. It is one among the fastest growing cities in the world. Following are the key economic indicators for the city:
Area/Item Primary Secondary Tertiary Total West Bengal ( Net State Domestic 7,766.55 7,310.76 14,802.16 29,879.47 Product in US Mn $ ) KMA ( District Domestic Product in US Mn 50.14 2,362.18 5,586.96 7,999.28 $ ) KMA’s share in West Bengal (%) 0.65 33.95 33.70 _ Distribution of SDP in KMA by Sector (%) 0.63 29.53 69.84 100 Table 4: Economic indicators of Kolkata as on 2001-02
7 Nov 2010
Market Survey & Demand Assessment Study
The figure represents sector-wise contribution of Kolkata’s GDP to the 25,000.00 20,000.00 total GDP of West Bengal. Kolkata 15,000.00 has a major share of contribution in 10,000.00
the Secondary and Tertiary sector 5,000.00
GDP of West Bengal. 0.00 Primary Seconda ry Tertiary GDP West Bengal GDP Kolkata As of 2001-02, Secondary and
Tertiary sector contributed about 2 30% and 70% respectively to the Figure 3: Sector-wise GDP contribution of Kolkata state’s GDP. Under The Tertiary sector, the service sector, chiefly IT&ITeS, Real estate, Business Services had a major contribution of nearly 45% to the total GDP of Kolkata 3.
2.3.2 Income overview
The Annual Survey of Industries data show that 1990-91 onwards there has been a significant increase in the quantum of Productive Capital base of KMA-districts, registering a growth of about 35.5 percent per annum in the KMA-districts, as against a much lower rate of growth of 19.7 percent per annum for the state as a whole. KMA-districts accounted for an investment of Rs.5591 crores in the large and medium industry projects implemented between 1991 and 2002. This constituted 25 percent of total investment of Rs.22,101 crores in West Bengal during the same period. On the contrary, the labour-output ratios have experienced a declining trend during the last decade in both the state as well as in KMA-districts. This could be explained by increasing adoption of capital-intensive or labour-saving technologies in manufacturing processes.
2.4 Economic Base and Drivers for the City
Trade & Industry in Kolkata has played a significant role in developing the economic scenario of West Bengal. The prominent industrial sectors in Kolkata are Information Technology, Real Estates, Electronics, Apparel and Plastic products. Information Technology is the most developing industry in Kolkata that accounts for a major portion to the overall trade in West Bengal. Some of the other significant industries in Kolkata include construction, chemicals, cosmetics & jewellery, furniture, sports goods, tourism, rubber, media and advertising.
Kolkata is also base to several industrial units with produce ranging from jute to electronics. Some of the renowned Indian companies headquartered in Kolkata include Bata India, ITC Limited, Coal India Limited, Birla Corporation, Bengal Peerless, National Insurance Company, Orient fans, Exide, Berger Paints and Tata Tea.
2 Source: Statistical Abstract, BAE&S GoWB,: data as of 2001-02 3 www.indiastat.com
Market Survey & Demand Assessment Study
Stagnation in the major traditional industries in KMA like jute, engineering, cotton and chemicals had been caused by a number of factors including the ownership structure of industries, the national policy of freight equalization for iron and steel, promotion of similar industries in other parts of the country to achieve regional balance etc. However, the knowledge based IT and ITES industries have witnessed year on year higher growth in terms of both annual turnover and exports. The magnitude of software exports from Kolkata rising from Rs. 3.5 billion in 1999-2000 to Rs.12 billion during 2002-03 and further to Rs.16 billion in 2003-04, have clearly reinstated the fact that IT&ITeS industry is the economic spine of Kolkata.
WEBEL is the facilitator for development of Information Technology (IT) and IT Enabled Services (ITES) in the state, besides being the nodal agency for development of electronic industries. Principally located in Salt Lake (chiefly in Sector V area), Rajarhat and to some extent in areas around EM Bypass currently, there are approximately 250 IT companies in Kolkata employing over 75,000 IT professionals.
IT/ITES
9 Nov 2010
Market Survey & Demand Assessment Study
The IT sector in Kolkata had grown at a CAGR of 88% between 1996-97 and 2002-03. During 2001-2005, it has witnessed 70% growth against the national average of 37%. The IT/ITeS Sector witnessed an export turnover of Rs 35 billion in 2006-07. Even during the recent global slowdown, the IT/ITeS growth in Kolkata is currently at 12% in the year 2008-09, which is still higher than the national average.
Kolkata had an advantage of lower commercial lease rentals/ capital rates, availability of large talent pool, lower attrition rates, adequate support infrastructure, adequate social infrastructure, affordable housing, which has been the major attraction for IT players looking for expansion plans with cheaper overhead costs.
Industry Overview MNCs like Pricewaterhouse Coopers, IBM, TCS, Cognizant, Wipro, Skytech, Lexmark, AIG and HSBC including Indian corporate houses like ITC Infotech and Reliance are operational in the city. Some other IT companies in Kolkata include Acumen Soft Technologies, Ambujex Technologies (P) Ltd, Alliant Technologies Private Limited, Apt Software Avenues Pvt Ltd, Bright Soft Solutions, Calinnovations, ChaiONE, Digital care Pvt. Ltd, Kris Systems Pvt Ltd, MaxMobility PVT LTD, Ontrack Systems Limited, Re-Life Digital Solution Pvt Ltd and Webel Technology Limited.
Some of the prominent IT campuses in Kolkata are the Wipro SEZ, the DLF IT Park at Rajarhat, Infinity Benchmark, Godrej Waterside, the Technopolis building, RMZ Ecospace mostly concentrated in Rajarhat & Salt Lake Sector V.
The West Bengal Government had earmarked IT Industry as the priority sector for Industrial Development in the State. A number of initiatives have been taken by the government to attract IT companies in the state, viz.: Setting up of a dedicated IT department within the ministry in year 2000, Government Empowering agencies like WEBEL in facilitating the IT sector in Sector V, Salt Lake, Initiatives Bringing IT within the ambit of Public Utility Services, Procurement and facilitating in land acquisition, Providing land at cross subsidy, Creating requisite physical infrastructure for the IT Industry.
Heavy-engineering Casting, forging, metallic articles, machinery, generators, transformers, electric motors, ships and vessels and related accessories, railway wagons and coaches and accessories have been the dominant traditional industries in KMA in terms of contributing substantially to state domestic product and also providing considerable employment. More than 3 lakh persons are employed in this industry in the state. The metal-based foundry industry and a large number of small engineering units in Howrah have been among the oldest heritage industries of India. This industry manufactures a wide range of products, Industry Overview serves the requirement of automobile industries, railways, agriculture, mining, various parts and components of jute, cotton, cement, rolling mills etc., and is highly labour intensive in nature. This industry has been passing through severe crisis due to a number of reasons, important among them being decentralization of procurement by Indian Railways, shortage of inputs like coal, lack of technological up gradation and diversification and freight equalization policy of the Government of India. Although the number of units is seen to be rising in recent years, there is a need for modernization of this industry to render itself more competitive.
Construction
10 Nov 2010
Market Survey & Demand Assessment Study
Construction Industry constitutes the second major activity after manufacture and engineering. The SDP generated in this sector in KMA-districts registered an annual average rate of growth of around 6.3 percent in the present decade (2001 onwards). A major part of the construction Industry Overview activities in KMA is accounted for by real estate and infrastructure development activities. Real estate activities have witnessed a significant jump in recent years within KMA, registering an annual growth of 9.5 percent in the same decade.
Chemicals and Small Scale Industries
West Bengal has been among the leaders in production of Chemicals, Drugs & Pharmaceuticals. The recent increasing popularity of herbal drugs has provided a great opportunity for drugs & pharmaceuticals industry in the State and also in KMA. The recently established Haldia Petrochemicals Complex 120 kilometres away from KMA has opened up opportunity for both chemical and drugs & pharmaceuticals industries within KMA.
Industry Overview The growth of registered Small Scale Industry (SSI) units has been significant in KMA, the total number of registered SSI units in KMA being approximately 6000 employing roughly 33,000 people. The major small-scale units in KMA are metal-based engineering, leather, chemicals and food based industries. However, most of these industries have been plagued by problems like inadequate supply of raw materials, absence of application of modern technology and lack of institutional financing facility.
Table 5: Key Industries
11 Nov 2010
Market Survey & Demand Assessment Study
2.5 Existing & Upcoming Infrastructure
2.5.1 Existing Infrastructure
Infrastructure Description
Kolkata’s airport provides both domestic and international connectivity and is located in the north of Kolkata City in Dum Dum. Kolkata is currently serviced by 14 international, 8 domestic airlines and 5 Cargo Airlines. The number of domestic & international passengers in 2006-07 was around 6 million.
Airport Calcutta Airport has been ranked as the 7th spot much ahead of Hyderabad International Airport (10th Spot), Chennai International Airport (14th Spot) and New Delhi Indira Gandhi International Airport (25th spot) in an official statistics regarding the "Top 25 fastest growing airports 2007" worldwide with a 28.2% increase in the passenger traffic, according to the World Airport Traffic 2007 report released by the Airports Council International.
Kolkata has a road space at just 6% of the total city area as against the standard 20% in well- planned cities like Delhi. The major road developments in KMA are: Belghoria Expressway Kona Expressway Acharya Jagadish Chandra Bose Road Eastern Metropolitan Bypass VIP Road Rajarhat Arterial Road Diamond Harbour Road Basanti Highway National Highway 2 Roads National Highway 6 National Highway 117 National Highway 34 National Highway 35 National Highway 41
The Rabindra Setu, the Vivekananda Setu, the Dakshineshwar Bridge and the Second Vivekananda Bridge, are the vital parts of linkages over the river Hooghly that create better accessibility to the entire KMA and its periphery.
Two recent significant developments are the SVTB (Second Vivekananda Tollway Bridge) and the Garia Metro Extension (operational by 2009) both of which have made a significant impact on traffic mobilization by improving connectivity and reducing travel-time. Kolkata has two major long distance railway stations at Howrah Station and Sealdah. Howrah station connects to rest of India and Sealdah station to north of Bengal and northeastern part of the country. It also has The Suburban Railway connecting to the suburbs surrounding the city of Kolkata. Railways The Kolkata Metro is the underground rail network in Kolkata, India. It is run by the Indian Railways and is the first underground built in India with service starting in 1984. The line begins at Dum Dum in the north and continues south through Park Street, Esplanade in the heart of the city till the southern end in Kavi Nazrul. The Port of Kolkata is a riverine port in the city of Kolkata, India. It is the oldest operating port in India, having originally been constructed by the British East India Company. The Port has two Port distinct dock systems - Kolkata Docks at Kolkata and a deep-water dock at Haldia Dock Complex, Haldia. Table 6: Existing Infrastructure
12 Nov 2010
Market Survey & Demand Assessment Study
Figure 4: Infrastructure Map
Figure 5: Kolkata Metro Expansion Map
Market Survey & Demand Assessment Study
2.5.2 Upcoming Infrastructure Initiatives
Projects Description Several new highways have been proposed in KMA, some major projects are mentioned below with the running length in kilometres:
Dum-Dum Barrackpore Expressway - Madhyamgram to Belghoria: 6.0 km
Eastern Expressway - NH 34 to Taki: 8.0 km - Taki to B N Dey Road: 22.5 km New Metropolitan - B N Dey Road to Baruipur and NH 34 to Barrackpore-Kalyani Road: 30.1 km
Highways Southern Expressway - Baraipur to Diamond Harbor Road: 15.5 km - Diamond Harbour Road to Budge Budge to Bauria to NH 6: 22.7 km - Bridge over / tunnel under Hooghly
Serampur-Barrackpore-Barasat Expressway - Connecting NH 2 and Eastern Expressway: 22.5 km
Western Riverfront Expressway - Andul Road to Bauria Connector: 14.0 km The proposed East-West Metro Corridor will run 13 km from Salt Lake to Howrah station and is set to be operational by 2012.
The 12 stations on the route will be Howrah, Mahakaran, Central, Bowbazar, Sealdah, Metro Rail Project Phoolbagan, Salt Lake stadium, Bengal Chemical, City Centre, Central Park, Karunamoyee and Sector V.
The route will intersect the existing North-South Metro Corridor at Central Station.
KMDA along with international fund houses like JBIC (Japan Bank of International Co- operation) has proposed construction of several flyovers/ bridges at critical junctions some of which have been shown below: Over crossing of Jessore Road and Dum Dum Road (2007-2012) Salt Lake Bypass across J K Saha Bridge (2007-2012) Along Anwar Shah Road across Raja Subodh Mallick Road (2007-2012) Esplanade – RA Kidwai Road - Across Park Street (2012 onwards) - Across Loudon Street (2012 onwards) Bridges/ Flyovers - Across Camac Street (2012 onwards) Elevated Ring Road Corridor around Kolkata with entry and exit ramps - Across Strand Bank Road-Strand Road-Diamond Harbor Road-Alipore- Prince Anwar Shah Road-EM Bypass-VIP Road-Circular Canal-Bagabazar (2012 onwards) Elevated Road from Park Circus to Parama Island (2012 onwards) Patipukur Underpass on Jessore Road (2012 onwards) EM Bypass to VIP Road (2012 onwards) Vivekananda Road Flyover Phase I : Howrah to CR Avenue crossing (2012 onwards) Vivekananda Road Flyover Phase II : CR Avenue crossing to Airport (2012 onwards) Table 7: Upcoming Infrastructure Initiatives
14 Nov 2010
Market Survey & Demand Assessment Study
3.0 KOLKATA RE AL ESTATE OVERVIEW
3.1 Retail
Kolkata retail market is envisaged to witness 20 neneww shoppingshopshoppingping malls currently in various stages of plaplanningnning and construction. Kolkata enjoys a vast pool of educated young population, whichwhich makes it an ideal location for the services industry.
Figure 6: Operational and Upcoming Malls in Kolkata
Traditionally, the organized retail activity in KolkaKolkatata has bee n concentrated in the Central Business District (CBD) and off-CBD areas. This included markets and high streets areasaarereasas like Park Street, Camac Street, Shakespeare Sarani, New Market and Elgin Road. The city presently hosts 9 malls, 6 of which are within the vicinity of CBD. However, a major proportion of the proposed supply is targeted towards the Eastern periphery of the city in the suburbs of Rajarhat NeNeww Town, VIP road, along the EM bypass and surroundisurroundingng areas.
3.1.1 Existing Stock
Kolkata consumer retail mar ket size is INR 13.139 billion 4. Out of this, the organized sector comprises of only 2-4 % of above. Not only is there a high demand for retretail,ail, but also limited present supply, a major causal factor for high absorption and low vacancy levelslevels iinn retail spa ce to about 5%-7% percent.
Organized retail (including malls and high streets) susupplypply recorded upsurge since 2005 (2.3 Mn Sq.ft. in 2007 versus 0.7 Mn Sq.ft. in 2005). This addition inin retail space has mainly been through the emergenceemergence of shopping malls.
4 Source: Cushman & Wakefield Research
Market Survey & Demand Assessment Study
At present, the organized retail marke t in Kolkata accounts for over 4 Mn Sq.ft. of gross leasable area, which essentially covers the organized retail in highhigh strestreets,streets,ets, shopping malls and large stand-alone department stores, out of which leasable area in Retail Mall in 2.95 Mn Sq.ft.
Operational Operational Malls Location Developer Size Milestone
Forum - I Elgin Road Rahul & Co 200,000 2003
City Centre - I Salt Lake Bengal Ambuja 300,000 2004
Metropolis EM Bypass CMGL 175,000 2005
Gariahat Shopping Mall Ballyguange Stn. Toplight Commercials 100,000 2006
Homeland Chowringee Merlin Group 100,000 2007
E Mall GC Avenue Hooghly Mills 84,000 2007
South City Mall PA Shah Road South City Group 1,000,000 2008
Mani Square EM Bypass Mani Group 600,000 2008
City Centre - II Rajarhat Bengal Ambuja 400,000 2009
Table 8: Existing malls in Kolkata
Figure 7: Map depicting the retail spread in Kolkata
Market Survey & Demand Assessment Study
3.1.2 Existing Scenario & Future outlook
Kolkata witnessed no fresh mall supply in Q3 2009. A number of projects are slated to be completed in Q4 of 2010. The retail sector in Kolkata is witnessing significant growth, the scale of the Kolkata’s retail revolution can be gauged by the fact that the organized retail mall space is expected to grow to approximately 5.54 Mn Sq.ft. by the year 2013.
Upcoming Developer Location/ Micro Type Development Expected Retail market Area (Million completion Development sq.ft.) New extension of Forum Courtyard Forum Projects Elgin Road 40000 Q2 2010 existing Forum mall Lake Mall Space Group Lake Market Mall 250000 Q4 2010 Salt Lake, near La-Vida Nangalia Group Mall 90000 Q4 2010 Karunamayee Diamond Plaza Diamond Group Jessore Road Mall 350000 Q4 2010 Salt Lake (near Down Town Nangalia Group AMRI Hospital & Mall 120000 Q2 2011 stadium) RB Connector Acropolis Merlin Group Mall 300000 Q4 2011 (besides Siemens) Avani Riverside Foresore Road, Avani Group Mall 491000 Q4 2011 Mall Howrah CESC Spencer's Syed Amir Ali Properties (RPG Mall 700000 Q4 2012 Galleria Avenue Group) Forum-II Forum Projects EM Bypass Mall 12,00,000 Q4 2013
Bengal Unitech New Town, Downtown Universal Rajarhat (Action Shopping complex 200000 Q4 2013 Infrastructure Pvt Ltd Area III) Table 9: Upcoming Retail developments in Kolkata
In the past two years a significant number of mall projects sought conversion to commercial or residential development, consequently supply has declined. Retailers showed less preference for upcoming mall projects in peripheral locations like Rajarhat due to uncertainty with regard to the malls' launch and lack of immediate catchments. In 2010 Leasing activities have picked up considerably however it is mostly restricted to the established malls. Rentals across various malls have stabilized in 2010.
Prime High Street Rentals Prime Mall Rentals Rent in INR/ Sq.ft./ Rent in INR/ Sq.ft./ Locations Locations month month 5 Park Street 245 South Kolkata 290 Camac Street 268 Salt Lake 400 Elgin Road 190 Rajarhat 130 Theatre Road 175 Elgin Road 450 Table 10: Retail rentals in Kolkata
5 Rentals mentioned are for ground floor premises on carpet area.
17 Nov 2010
Market Survey & Demand Assessment Study
The city's malls witnessed major correction in the rentals since 2008; it has stabilized since December 2009. Kolkata is likely to witness an uptrend in the rental values across both the malls and main streets in 2011. Malls with affordable rentals and established catchments are likely to see interest from retailers. Value retail and discount segments will continue to command a significant share of the market pie; seeing increased interest from retailers to enter the segment.
Mall Rental Trend 600 500 400 South Kolkata 300 Salt Lake 200 Rajarhat
Rent in in INR/Sft/month Rent 100 Elgin Road 0 08 08 08 08 09 09 09 09 09 09 09 09 09 09 09 10 10 10 10 10 10 10 10 09 10 ------Jul Jul Oct Oct Apr Apr Jan Jun Jan Jun Mar Mar Feb Feb Nov Nov Sep Dec Sep Dec Sep Aug Aug May May
Figure 8: retail mall rental trend
The high streets also witnessed exits of significant retailers from prominent locations. This is mainly attributable to the unjustifiably high price points in respect to sales. Locations with established catchments in South Kolkata and adjoining areas registered some activity in terms of both leasing as well as retailers' interest.
3.2 Existing & Potential Growth Corridors It has been observed over the last 3-4 years from the city’s development pattern that the overall growth in commercial, residential and retail sectors is shifting to the eastern corridors from central business districts of the city. Kolkata Metropolitan Area is dotted with several existing and upcoming Commercial Micro-Markets, the significant ones being CBD (Park Street, AJC Bose Road), South-Central Kolkata, Salt Lake and New town Rajarhat. Developments at EM Bypass (near the Eastern Kolkata Township) also indicate an emerging Sub-CBD in the years to come with a number of businesses relocating from the old CBD to these areas.
18 Nov 2010
Market Survey & Demand Assessment Study
Figure 9: CBD and Growth Corridors
Kolkata Metropolitan Area has emerging growth corridors other than the established micro-markets that have witnessed sufficient development in the recent past. Of all the growth corridors of Kolkata, Rajarhat is among the most prominent emerging commercial micro-markets with a strong presence of global and national level IT players as the major occupants of the available and upcoming commercial spaces. It not only enjoys nearness to the Airport but also moderate connectivity with the other important regions of Kolkata, as well.
Growth Corridors Uluberia - Haldia NH6 Growth VIP (Nazrul Islam Avenue) Kona Expressway Corridor Corridor
EM Bypass Corridor Budge Trunk Road CIT Road - Kankurgachi - Corridor Batanagar (Maheshtala) Ultadanga Corridor Baruipur Township Baishnabghata - Patuli Area Township Area Sector V, Salt Lake Dankuni - Uttarpara NH2 Growth Corridor BRADA Corridor
19 Nov 2010
Market Survey & Demand Assessment Study
4.0 SITE AND LOCATION AN ALYSIS
4.1.1 Location map
Figure 10: Location Map
4.1.2 Distance chart
The distance of the subject property from prominent locationslocations has been listed below:
Location Distance (In Km) Salt Lake Sector V 8 Garia 12 Airport/Dumdum 12.5 CBD of Kolkata 5 Table 11: Distance chart
4.1.3 Accessibility & Neighborhood
Details Road Approached by EM Bypass Nearest Railway station is the Garia Station roughly 2 -3 Accessibility Rail kilometres by road Air EM Bypass leads to the Netaji Subhash Bose Airport Road width 25 m Neighborhood Profile Upcoming Residential, Hospitality and Commercial projprojectsects
Market Survey & Demand Assessment Study
Salt Lake, Kankurgachi, New Town Dumdum, Lower Stretch of Primary Catchment EM Bypass (Kasba, Garia, Topsia, Gariahat, Jadavpur) Retail Rentals: 100 per month Average Rental/Sale Value (INR/Sq ft)
Silver Spring, Science City, ITC Sonar Hotel, Trade Fair Prominent developments in the vicinity Grounds, China Town
Table 12: Location overview
4.1.4 SWOT analysis
Strengths Weaknesses
Good access to CBD, Airport Availability of transport infrastructure Located in one of the prominent growth Traffic congestion near Science City, corridors of the city due to undergoing Flyover project. Availability of good road frontage Abundant greenery (PC Chandra Park) in site vicinity
Opportunities Threats
Increased retail space off-take in prominent locations. Supply of other retail development in Low vacancy of 5% in operational Malls, vicinity may offer competition Potential to create large format destination mall.
Table 13: SWOT analysis of property
4.1.5 Initial Development Proposition To be provided based on an initial assessment of the site location
Development Proposition Details Retail To act as a major retail destination for the city
Table 14: Initial Development Proposition
21 Nov 2010
Market Survey & Demand Assessment Study
5.0 MICRO MARKET OVERVIEW
5.1 Introduction to Micro Market • The Eastern Metropolitan Bypass is a major road connecting the northern corridor to the southern corridor of the city. Beginning from the northern hub of Ultadanga to Garia in the south, the road covers a distance of 21 km along the eastern fringe of the city. It is one of the significant roads (four-lane wide) of the metropolis and is an emerging economic growth corridor. There is a proposal to extend the road to the Falta Export Processing Zone (FEPZ) at Falta on the Hooghly River, further 60 kilometers below Kasba.
• A number of connecting roads link the bypass to major micro-markets in Kolkata, the most significant among them being the Park Circus connector connecting Park Circus to EM Bypass and the Rash Behari Connector connecting Gariahat to EM Bypass. EM Bypass is connected by various ancillary roads that connect to the CBD regions of Kolkata. These are:
• The Park Circus Connector that meets EM Bypass at the junction of the 5-star ITC Sonar Bangla Hotel & Science City • The Rash Behari Connector meets EM Bypass at the Ruby Hospital • Eastern Metropolitan Bypass Link Road connecting Garia and Patuli township • Santoshpur Avenue connecting Santoshpur and Jadavpur • Anwar Shah Road Connector connecting Dhakuria and Lake Gardens • Maniktala connector connecting Maniktala market
• EM Bypass is a major link of Kolkata which is not only the gateway to the IT hub of the city at Sector V, Salt Lake, and the emerging planned township of Rajarhat while approaching from south, but also the corridor that leads eventually to the Airport via Rajarhat on the one hand, while connecting to Ultadanga, one of the major traffic interchange junctions of Kolkata on the other.
• The site is located at the Eastern Metropolitan Bypass Extension connecting Garia and is expected to capitalise on the positive impacts spurred off by the Garia Metro Station, which is due to open shortly.
5.2 Key Developments along EM Bypass
• 5-star hotels like the Hyatt Regency and the ITC Sonar Bangla
• Institutional developments such as West Bengal National University of Juridical Sciences, Govt. College of Engineering and Leather Technology and Satyajit Ray Film & Television Institute
• Recreational developments like Salt Lake Stadium, Swabhumi, Science City
• Institutional Health Care developments like the Ruby Hospital, Rabindranath Tagore International Institute of Cardiac Sciences, Peerless Hospital and B.K.Roy Research Centre, Apollo Gleneagles Hospital
• Educational Institutes like the Calcutta International School
• Premium Residential Complexes like Silver Spring, Avishikta, Greenwood Nook, Kolkata Greens, Udayan, and Hiland Park
• ITC Sonar Bangla Hotel – II is expected to come up in the same site of ITC Sonar Bangla Hotel which is envisaged as a 500 room, 27 floored structure with two basements
• A 3.7-km road skirting the Bypass is being planned as a four-lane road which will branch off the Bypass at the Chowbhaga crossing, near the intersection of the Prince Anwar Shah connector and the Bypass, and extend up to Basanti Road. The project will be developed on a public-private partnership by the Kolkata Municipal Corporation, Kolkata Metropolitan Development Authority and some private parties, including the Heritage and Shrachi groups.
22 Nov 2010
Market Survey & Demand Assessment Study
5.3 Retail
EM Bypass is an established residential corridor with s everal commercial properties lying alongside the fringes of the corridor. On account of the sizeable length of EM Bypass, the real estate characteristics are different along different stretches of the corridor.
Some of the significant retail projects in K olkata are in EM Bypass, the details of which are ggiveniven below:
Name of the Mall/ Retail Size Operational Location Developer Project (sq.ft.) Milestone Metropolis EM Bypass CMGL 175,000 2005 Silver Arcade EM Bypass Sanjeevani Group 70,000 2006 Spencer’s Retail EM Bypass Bengal Peerless 38,000 2006 Mani Square EM By pass Mani Group 600,000 2008 Metro Cash & Carry EM Bypass Metro Group 100,000 2008 Table 15: Existing and Upcoming Malls in EM Bypass
The following diagram represen ts the spatial distribution of real estate projects alonaalonglongg Eastern Metropolitan Bypass:
Figure 11: Real Estate Developments along EM Bypass
Market Survey & Demand Assessment Study
6.0 PROJECT ANALYSIS
6.1 Demand Assessment
The proposed project being situated on the lucrative growth corridor of EM Bypass large format retail development may be explored. We have considered the fact that the site is well connected to a large catchment area beginning from Dumdum to Garia via Salt Lake and New Town. Further it is a short driving distance from CBD. The location is already an urban getaway with Science City, PC Chandra Greens and Trade Fair grounds in the vicinity of the project site. The area is also emerging as a high end residential location.
Primary Catchment Secondary Catchment (Salt Lake, Dumdum, Parameters (Lower EM Bypass, New Town, Garia, Kasba) Kankurgachi Topsia) Distance (km) from micro-market 2.0 - 6.0 8 - 12.5 Time (min) from micro-market 5.0 - 15.0 20.0 - 30.0 Area in sq.km. 35 100 Population density (persons per sq.km.) 16,600 22,700
Demand for Retail 1) Population Led Demand Average Household Size in Kolkata 4.5 No of H/H in Primary Catchment 129,114 403,556 No of H/H in Secondary Catchment
Shoppers, Spend and Visits Percentage of H/H in Primary Catchment in consumer category for organized retail 80% Percentage of H/H in Secondary Catchment in consumer category for organized retail 70% Average No. of Shoppers per family 2 Average Spend Per visit per person (Primary Catchment) 1,079 Rs Average Spend Per visit per person (Secondary Catchments) 763 Rs Average No of visits per month (Primary Catchment) 2 Average No of visits per month (Secondary Catchments) 1 Expected Revenues From Primary Residential Catchment 5015 Mn Rs/annum From Seconda ry Residential Catchments 4804 Mn Rs/annum Total Expected Revenue per annum 9820 Mn Rs/annum Max Chargeable Total Rental (12.5% of Revenues) 1,227 Mn Rs/annum Max Chargeable Average Rental 100 (Rs./sq.ft/p.a.)
Total Mall Demand in Micro-market (size) 1,022,865 Sq.ft. Competition in other retail developments (size) NA Sq.ft. Probable Mall Size in Subject Property 1,022,865 Sq.ft.
Table 16: Demand Assessment Table for Retail space
24 Nov 2010
Market Survey & Demand Assessment Study
7.0 FINANCIAL ANALYSIS
7.1 Assumptions As per information provided by “client”, FAR of 2.5 has been assumed for calculating Built-up-Area excluding car parking. Construction costs for the project have been assumed as per market benchmarks and thumb rule assumptions, considering the nature of the development components proposed.
7.1.1 Area Assumptions
Component Area
Built-up Area 775,368
Car Parking 513,681
Total Construction Area 1,289,049 775,368 Total Leasable Area
Table 17: Construction cost assumptions No assumptions have been made for power, water and other regular costs as these have been treated as a pass-through to the end user, since the charges for these facilities would be recovered by “client” from the users at actual.
7.1.2 Project Development key dates
Project Key Dates Start date 01-Jan-11 Construction starts after approval of Development Plan 6 Months Contruction period (+Lead time) 42 Months Certification/Approval for Occupancy/Usage 0 Months Operation/Occupancy starts on 01-Jan-15 Financial year ending (of occupancy/lease) 31-Mar-15 Table 18: Land development cost assumptions
7.1.3 Project Structure Assumptions
Structure Equity Return Expectation Rate 20% Debt Rate 12% Equity Percentage 35% Debt Percentage 65% Developer Profit Margin Discounting Rate 12.46% Table 19: Land development cost assumptions
25 Nov 2010
Market Survey & Demand Assessment Study
7.1.4 Construction cost 6
Escalation Development Component Cost on BUA (INR/Sq.ft.) (per annum)
Retail Mall 3220 3%
Car Parking 350 3%
Table 20: Construction cost assumptions
7.1.5 Other cost assumptions
Other Costs Percentage (%) Architects & Consultants' Fee (%-age of Construction Cost) 2.4 Admin & Pre-Operative Expenses (%-age of Construction Cost) 5.6 Advertising & Marketing Cost (%-age of Construction Cost) 1.5 Miscellaneous & Contingencies (%-age of Construction Cost) 11 Total 20.50
Table 21: Other cost assumptions
7.1.6 Land development cost
The infrastructure development like roads, power and water supply is already available inside notified area of ML Dalmiya SEZ. Therefore land development cost for the project has been assumed to be minimal.
Cost component on Built up Area INR in Rs/ Sq.ft. Infrastructure cost 20 Land cost 78.89 Table 22: Land development cost assumptions
7.1.7 Revenue assumptions
Capitalization Rental (INR/Sq.ft.) on saleable/ Escalation Development Component Rate leasable area (per annum)
Retail Mall 107 per month 5% 10.5%
Table 23: Revenue assumptions
7.1.8 Phasing assumptions
Development Phasing 31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14 Retail Mall 42.00% 21.00% 20.00% 17.00%
Lease Phasing 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 Retail Mall 85.00% 90.00% 90.00% 95.00% Table 24: Phasing assumptions
7.1.9 Project Returns Based on the above assumptions, following are the arrived returns for the project:
6 Construction Cost implies bare shell cost without fittings and furnishings and does not include soft costs like overhead charges, consulting fees, etc.
26 Nov 2010
Market Survey & Demand Assessment Study
Project NPV In Project IRR Equity IRR INR Million Equity NPV In INR Million Project Returns as on Jan 1 st as on Jan 1 st 2010 2010 Retail Mall 1839 2246 20.7 % 31.7%
Table 25: Project Returns
27 Nov 2010
Market Survey & Demand Assessment Study
7.1.10 Project Balance Sheet
Balance Sheet 1-Jan-11 01-Apr-11 01-Apr-12 01-Apr-13 01-Apr-14 01-Apr-15 01-Apr-16 01-Apr-17 01-Apr-18 01-Apr-19 01-Apr-20 01-Apr-21 31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 Years 0 1 2 3 4 5 6 7 8 9 10 11 Liabilities Share Capital - Equity 15.70 521.89 824.29 824.29 824.29 824.29 824.29 824.29 824.29 824.29 824.29 824.29 Reserves & Surplus - - (13.95) (27.90) (26.85) (3.68) 129.66 338.50 591.08 974.49 1,399.90 1,746.06
Term Loan - Secured 29.16 969.23 1,530.82 1,986.06 2,380.98 2,259.83 2,068.47 1,820.22 1,522.14 1,224.06 925.98 627.90 Total Liabilities 44.86 1,491.12 2,341.15 2,782.44 3,178.41 3,080.43 3,022.42 2,983.00 2,937.51 3,022.83 3,150.17 3,198.25
Assets Fixed Asset Gross Block ------
Depreciation - - - - 76.39 359.23 323.30 290.97 261.88 235.69 212.12 143.18
Net Block - - - - (76.39) (359.23) (323.30) (290.97) (261.88) (235.69) (212.12) (143.18)
Cuurent Asset Work In Progress 44.86 1,491.12 ------Cash & Bank Balance - - 2,341.15 2,782.44 3,254.80 3,439.66 3,345.73 3,273.98 3,199.38 3,258.52 3,362.29 3,341.43
Total Assets 44.86 1,491.12 2,341.15 2,782.44 3,178.41 3,080.43 3,022.42 2,983.00 2,937.51 3,022.83 3,150.17 3,198.25 Table 26:Projected Balance Sheet
7.1.11 Project P&L
1 Nov 2010
Market Survey & Demand Assessment Study
Profitability Statement 1-Jan-11 01-Apr-11 01-Apr-12 01-Apr-13 01-Apr-14 01-Apr-15 01-Apr-16 01-Apr-17 01-Apr-18 01-Apr-19 01-Apr-20 01-Apr-21 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar-11 12 13 31-Mar-14 15 31-Mar-16 17 18 19 20 21 22 Years 0 1 2 3 4 5 6 7 8 9 10 11 Revenue Income Retail Space - - - - 161 683 785 829 829 953 953 715 Maintenance Charges Retail Space - - - - 19 85 89 99 104 109 114 90
Total Revenue - - - - 180 768 874 928 932 1,062 1,067 805 Expenditure Operating and Maintenance Cost - - - - 19 79 83 87 91 96 100 79 Total Expenditure - - - - 19 79 83 87 91 96 100 79
PBITD - - - - 162 689 792 841 841 966 967 726 Interest on Retail Space - - - - 66 278 260 233 201 165 129 70 Depreciation Retail Space - - - - 76 359 323 291 262 236 212 143 Profit Before Tax - - - - 20 51 209 317 379 566 626 513 Tax Retail Space - - 14 14 19 28 75 108 126 182 200 167 Profit After Tax - - (14) (14) 1 23 133 209 253 383 425 346 Table 27: Projected Profit & Loss
7.1.12 Project Cash Flows Cash Flow 1-Jan-11 01-Apr-11 01-Apr-12 01-Apr-13 01-Apr-14 01-Apr-15 01-Apr-16 01-Apr-17 01-Apr-18 01-Apr-19 01-Apr-20 01-Apr-21
2 Nov 2010
Market Survey & Demand Assessment Study
31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 Years 0 1 2 3 4 5 6 7 8 9 10 11 Sources of Funds Increase in Capital 15.70 506.19 302.39 ------Increase in Term Loan 29.16 940.07 561.59 ------Profit After Tax - - - - 161.56 688.95 791.66 840.81 841.41 966.35 967.02 725.79
Total 44.86 1,446.26 863.98 - 161.56 688.95 791.66 840.81 841.41 966.35 967.02 725.79 Application of Funds Fixed Assets - - (1,491.12) ------Work in Progress 44.86 1,446.26 ------Interest Payment - - - - 65.51 278.45 259.70 233.32 200.54 164.77 129.00 69.92
Tax - - 13.95 13.95 18.62 28.10 75.31 107.67 126.42 182.48 200.49 166.52 Term Loan Repayment - - - 0.64 4.29 121.80 191.99 248.90 298.72 298.72 298.72 298.08
Total 44.86 1,446.26 (1,477.17) 14.59 88.41 428.34 527.01 589.89 625.68 645.98 628.21 534.53
Opening Balance - - - 2,341.15 2,326.56 2,399.71 2,660.31 2,924.96 3,175.87 3,391.61 3,711.98 4,050.79 Surplus / Defecit - 0.00 2341.15 (14.59) 73.15 260.60 264.65 250.91 215.74 320.37 338.81 191.27 Closing Balance - - 2,341.15 2,326.56 2,399.71 2,660.31 2,924.96 3,175.87 3,391.61 3,711.98 4,050.79 4,242.06 Table 28: Projected Cash Flows
3 Nov 2010
Market Survey & Demand Assessment Study
7.1.13 Project Cost
Description of Items Rate INR Per Sq Ft. Project Cost (INR Million) Land Cost: 118 Civil Works: 1516 1175 Piling 229.70 1,782 Sub Structure 490.03 3,801 Superstructure 612.54 4,751 Brickwork/ Plaster 84.22 653 Waterproofing 38.28 297 Anti Termite 15.31 119 Boundary Wall including Roads 45.94 356 14,366.00 Finishes 620 481 Door 61.25 475 Interior 145.48 1,128 Flooring 153.14 1,188 Elevation 214.39 1,663 Landscaping 45.94 356 5,260.00 Utility & Services 1084 840 Lift & Escaltors 218.98 1,698 Electric 336.90 2,613 Firefighting 61.25 475 Plumbing & Sanitary 91.88 713 A C Plant 313.93 2,435 Building Automation 61.25 475 Total Hard Cost 3220 2804 Table 29: Project cost summary
1 Nov 2010
Market Survey & Demand Assessment Study
Months 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd
Cost Elements (INR Lacs) Soil Testing - 3 ------Civil Works - - - 713 534 273 1,793 1,146 1,051 1,182 546 276 573 306 291 291 291 291 291 291 291 291
Pilling - - - 713 534 267 267 ------Sub -Structure
& Basement ------1,520 1,140 570 570 ------Superstructur e ------475 475 475 238 475 238 238 238 238 238 238 238 238 238 Brickwork/ Plaster ------131 65 33 33 33 33 33 33 33 33 33 33 33
Waterproofing ------59 30 15 15 15 15 15 15 15 15
Anti Termite - - - - - 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 Boundary Wall including Roads & ------Pathways
Finishes ------Door & Window ------
Interior ------
Flooring ------
Elevation ------
Landscaping ------
Utility & Services ------935 624 624 624 312 312 - - 122 122 122 73 73 428 199 Lift & Escaltors ------255 -
Electric ------392 261 261 261 131 131 ------78 105 Firefighting
1 Nov 2010
Market Survey & Demand Assessment Study
------71 48 48 48 24 24 ------Plumbing & Sanitary ------107 71 71 71 36 36 ------21 7
A C Plant ------365 243 243 243 122 122 - - 122 122 122 73 73 73 73 Building &
Automation ------14 Mobilisation 50 25 25 19 ------Architect &
Consultancy 225 - 10 15 15 5 15 - 15 15 - 10 - 20 - - 10 - - 15 Plan
Sanction - 1,603 ------Fees
Total Bare Cost ( 2 to 8) 275 1,631 35 746 534 288 1,793 2,086 1,690 1,805 1,185 603 885 316 291 433 413 413 374 364 719 505
Pre -
Operative 779 16 1 7 11 6 18 21 17 18 12 6 9 6 6 9 8 8 7 7 7 5 Expenses Administrative & Overhead Expenses 773 16 1 7 11 6 18 21 17 18 12 6 9 6 6 9 8 8 7 7 7 5 Marketing and Publicity 6 ------TOTAL (9 to 10) 1,054 1,648 36 754 545 294 1,811 2,107 1,707 1,823 1,197 609 894 322 297 441 421 421 382 371 726 510 Contingency Provisions - 165 4 75 55 29 181 211 171 182 120 61 89 32 30 44 42 42 38 37 73 51
TOTAL (10 to 11) 1,054 1,812 39 829 600 323 1,992 2,318 1,877 2,006 1,316 670 983 354 326 486 463 463 420 408 798 561
Interest During Construction - 1 18 18 24 28 30 43 57 70 83 92 96 103 106 109 112 116 120 123 126 132 @ 12% GRAND
TOTAL (11 to 1,054 1,813 57 848 623 351 2,022 2,361 1,935 2,075 1,399 761 1,079 457 432 594 576 579 539 532 925 693 12)
MEANS OF FINANCE
2 Nov 2010
Market Survey & Demand Assessment Study
Heads 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd
Promoters Contribution 1,000 62 21 314 231 130 749 874 717 769 518 282 400 169 160 220 213 215 200 197 343 257 Term Loan from Banks 54 1,751 36 534 393 221 1,273 1,486 1,218 1,307 881 479 680 288 272 374 362 365 340 335 582 437 GRAND TOTAL 1,054 1,813 57 848 623 351 2,022 2,361 1,935 2,075 1,399 761 1,079 457 432 594 576 579 539 532 925 693
Months 23rd 24th 25th 26th 27th 28th 29th 30th 31th 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd Total Cost Elements Soil T esting
------3 Civil Works 291 291 53 15 15 15 ------71 71 71 71 36 36 - - 11,758
Pilling ------1,782 Sub -Structure & Basement ------3,801
Superstructure 238 238 ------4,751
Brickwork/ Plaster 33 33 33 ------653
Waterproofing 15 15 15 15 15 15 ------297
Anti Termite 6 6 6 ------119 Boundary Wall
including Roads & ------71 71 71 71 36 36 - - 356 Pathways
Finishes ------199 346 377 265 249 329 422 401 394 505 504 618 202 4,810
Door & Window ------24 29 48 43 38 48 48 48 48 52 52 - - 475
Interior ------56 56 56 56 56 113 113 56 113 113 113 113 113 1,128
Flooring ------119 95 107 83 71 119 95 95 48 119 119 119 - 1,188
Elevation ------166 166 83 83 50 166 166 133 150 166 333 - 1,663
Landscaping ------36 53 71 53 53 89 356
3 Nov 2010
Market Survey & Demand Assessment Study
Utility & Services 206 189 237 166 203 349 94 114 93 81 219 88 10 303 38 281 349 335 446 41 8,409
Lift & Escaltors - - - - - 170 - - - - 153 - - 187 - 136 255 221 323 - 1,698
Electric 105 - 78 - 78 78 - 78 78 52 52 52 - 78 - 52 52 78 78 - 2,613
Firefighting - 24 24 24 14 14 14 14 14 14 14 14 10 10 10 - - - - - 475
Plumbing & Sanitary 14 21 14 21 14 14 7 21 - 14 - 21 - 14 14 21 14 21 21 21 713
A C Plant 73 73 73 73 49 49 49 ------2,435 Building &
Automation 14 71 48 48 48 24 24 - - 14 14 71 28 14 24 20 475
Mobilisation
------119 Architect &
Consultancy - 10 - 15 - 20 - 15 20 14 5 10 15 10 20 5 30 35 594 Plan Sanction Fees
------1,603
Total Bare Cost ( 2 to 8) 497 490 290 196 218 384 94 328 439 478 485 351 415 806 525 756 909 879 1,094 278 27,296
Pre - Operative Expenses 5 5 6 4 34 37 2 18 34 20 35 33 19 23 17 22 21 24 25 21 1,389 Administrative & Overhead Expenses 5 5 6 4 4 8 2 3 4 5 5 4 4 8 5 8 9 9 10 6 1,092 Marketing and Publicity - - - - 30 30 - 15 30 15 30 30 15 15 12 15 12 15 15 15 297 TOTAL (9 to 10) 502 495 296 199 252 421 96 346 473 497 519 384 434 829 542 779 930 903 1,119 299 28,685 Contingency Provisions 50 50 30 20 25 42 10 35 47 50 52 38 43 83 54 78 93 90 112 30 2,763
TOTAL (10 to 11) 552 545 326 219 277 464 105 381 520 547 571 422 477 912 596 856 1,023 993 1,231 329 31,448
Interest During
Construction @ 137 141 145 148 151 153 157 159 162 167 171 176 179 184 191 195 202 210 217 226 5,078 12% GRAND TOTAL (11 to 12) 689 686 471 368 428 617 262 540 682 714 742 598 657 1,096 787 1,052 1,225 1,203 1,448 555 36,526
MEANS OF
FINANCE Heads 23rd 24th 25th 26th 27th 28th 29th 30th 31th 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd Total
4 Nov 2010
Market Survey & Demand Assessment Study
Promoters Contribution 255 254 174 136 158 228 97 200 253 264 275 221 243 406 291 390 454 445 536 206 13,528 Term Loan from Banks 434 432 297 232 269 388 165 340 430 449 467 376 413 690 495 662 771 757 912 350 22,998 Grand Total 689 686 471 368 428 617 262 540 682 714 742 598 657 1,096 787 1,052 1,225 1,203 1,448 555 36,526
Table 30: Detailed Cost Phasing
5 Nov 2010
Market Survey & Demand Assessment Study
8.0 CONCLUSION / RECOMMENDATION
In the last two years a number of intended retail development projects have been postponed or converted to commercial real estate, thereby bringing down vacanacy levels in existings malls to about 5%. A 15-20% correction in rental values has increased the investment attractiveness for tenant. The economic upturn in 2010 has positively impacted the real estate sector. The retail demand outlook for the next 2-3 yaers is positive.
Based on the analysis of the market dynamics and location, the following recommendations are suggested:
• Positioning : The general catchments of the micro market have presence of commercial, residential and hotels, catering to the demand for HIG and MIG. The subject micro market is situated close to existing retail and commercial corridor Park Street, Topsia and Kasba. Thus have the opportunity to provide quality retail space at relatively lower rates to the occupiers. • Size : Based upon our Demand Estimation, total BUA recommended for retail is 775,000 sq ft at the subject land parcel. For the retail development, ratio of anchor to vanilla has been recommended to be around 40% to 60% in the overall tenant mix. The project should provide value added services to tenants. This will assist in targeting demand from different segments and spread the risk over a larger demand base. • Rentals and ARR : Considering the price point of other similar retail developments in Kolkata and adjoining High Streets weighted average rentals for the project in current scenario is estimated to be INR 107/ sq ft for retail
Conclusion
The above detailed demand and financial analysis concludes that the project is financially viable and will be able to meet the financial obligations. Based on the financial analysis the estimated Project IRR is 20.7 %.
1 Nov 2010
Market Survey & Demand Assessment Study
CAVEATS AND LIMITATION
1. The Development Feasibility Study (hereafter referred to as the “Report”) is not based on comprehensive market research of the overall market for all possible situations. Cushman & Wakefield India (hereafter referred to as “C&WI”) has covered specific markets and situations, which will be highlighted in the Report. C&WI has not carried out comprehensive field research based analysis of the market and the industry given the limited nature of the scope of the assignment. In this connection, C&WI has relied solely on the information supplied to C&WI and update it by reworking the crucial assumptions underlying such information as well as incorporating published or otherwise available information. 2. In conducting this assignment, C&WI has carried out analysis and assessments of the level of interest envisaged for the city under consideration and the demand-supply for the commercial retail & hospitality sector in general. C&WI has also obtained other available information and documents that are additionally considered relevant for carrying out the exercise. The opinions expressed in the Report will be subject to the limitations expressed below. a. C&WI endeavors to develop forecasts on demand, supply and pricing on assumptions that has been considered relevant and reasonable at that point of time. All of these forecasts are in the nature of likely or possible events/occurrences and the Report will not constitute a recommendation to Forum Shopping Centres Pvt Ltd (hereafter referred to as the “Client”) or its affiliates and subsidiaries or its customers or any other party to adopt a particular course of action. The use of the Report at a later date may invalidate the assumptions and bases on which forecasts have been generated and is not recommended as an input to a financial decision. b. Changes in socio-economic and political conditions could result in a substantially different situation than those presented at the stated effective date. C&WI assumes no responsibility for changes in such external conditions. c. In the absence of a detailed field survey of the market and industry (as and where applicable), C&WI has relied upon secondary sources of information for a macro-level analysis. Hence, no direct link is sought to be established between the macro-level understandings on the market with the assumptions estimated for the analysis. d. The services provided is limited to development feasibility and will not constitute an audit, a due diligence, tax related services or an independent validation of the projections. Accordingly, C&WI will not express any opinion on the financial information of the business of any party, including the Client and its affiliates and subsidiaries. The Report is prepared solely for the purpose stated, and should not be used for any other purpose. e. While the information included in the Report is believed to be accurate and reliable, no representations or warranties, expressed or implied, as to the accuracy or completeness of such information is being made. C&WI will not undertake any obligation to update, correct or supplement any information contained in the Report. f. In the preparation of the Report, C&WI has relied on the following information: i. Information provided to us by the Client and its affiliates and subsidiaries and third parties; ii. Recent data on the industry segments and market projections; iii. Other relevant information provided to us by the Client and its affiliates and subsidiaries at C&WI's request; iv. Other relevant information available to C&WI; and v. Other publicly available information and reports. 3. The Report reflects matters as they currently exist. Changes may materially affect the information contained in the Report. 4. All assumptions made in the feasibility study are based on information or opinions as current. In the course of the analysis, C&WI has relied on information or opinions, both written and verbal, as current obtained from the Clients as well as from third parties provided with, including limited information on the market, financial and operating data, which would be accepted as accurate in
2 Nov 2010
Market Survey & Demand Assessment Study
bona-fide belief. No responsibility is assumed for technical information furnished by the third party organizations and this is bona-fidely believed to be reliable. 5. No investigation of the title of the assets has been made and owners' claims to the assets is assumed to be valid. No considerations have given to liens or encumbrances, which may be against the assets. Therefore, no responsibility is assumed for matters of a legal nature. 6. The Client including its agents, affiliates and employees, must not use, reproduce or divulge to any third party any information it receives from C&WI for any purpose without prior consent from C&WI and should take all reasonable precautions to protect such information from any sort of disclosure. The information or data, whether oral or in written form (including any negotiations, discussion, information or data) forwarded by C&WI to the Client may comprise confidential information and the Client undertakes to keep such information strictly confidential at all times.
3 Nov 2010
Market Survey & Demand Assessment Study
ANNEXURE 3 – SITE PHOTOGRAPHS
Photographs
Science City and Trade Fair Grounds are opposite to the subject site
Subject Property Photograph
ITC Sonar Bangla, a star hotel property The subject site is adjoining PC is located adjacent to the site Chandra Greens, located on service
road abutting EM Bypass Land Mark hotel a 3 star hotel is also
adjacent to the site.
Silver Spring Residential Complex and Spring club is the vicinity of the subject site
4 Nov 2010