Luxury realtors in a fix over demand shortage from home buyers and retailers hit by the economic slowdown are tinkering with terms to make their business work.
Ambience Group, which has a well-positioned mall on the National Highway 8 connecting Delhi with Gurgaon’s plush zones has decided to waive a minimum revenue guarantee usually paid in the form of upfront payment and is willing to switch to a revenue-sharing model from a plain tenant-landlord relationship.
It has also slashed by 20 to 30 per cent from Rs 14,500 per square foot the prices of its upcoming luxury condominium project in Gurgaon, Caitriona, and deferred its construction date for the project by a year to 2011. The project includes a golf course and a five-star hotel.
The mall was completed in October last year but many shops are still lying vacant. The developer puts the unoccupied share at 10 per cent and says there has been no reduction in rentals.
“We have not lowered our rentals and are reviewing deals on a case-to-case basis. In some cases, we have suspended minimum guarantee,” said Raj Singh Gehlot, Ambience’s CMD.
According to industry experts, rentals have come down by 30 to 40 per cent, but market leaders like DLF and Unitech insist there has been no cut. “Rentals have not come down in operational malls but in upcoming ones retailers are negotiating for revenue sharing so that the builder is also responsible for driving footfalls,” said a spokesperson at consulting firm Jones Lang LaSalle.
Gehlot said converting the footfalls into real sales was a challenge.