Malls business has proved to be stable & resilient

MUMBAI: If you���re serious about property, which is a wealth creator and an investment haven, you should pay attention to the words of David Fischel, the chief executive of Liberty International. He is one of the most respected property professionals in the UK, where his company owns four of the eight largest regional shopping malls. After its magical performance in the UK retail sector, Liberty extended its business to US. Proving its potential there, Liberty is now eyeing a slice of the Indian retail pie.

���For past five years, we were scouting for opportunities in India and recently we found the right partner ��� Provogue (India), which has entrepreneurial ability and a decent knowledge about the domestic market,��� says Mr Fischel. Prozone Liberty, a 75:25 joint venture between Provogue (India) and Liberty International, will invest Rs 1,000 crore to develop mega shopping centres in Aurangabad, Mysore, Surat, Indore, Thane and Jaipur.

As part of the second phase, the joint venture will open four more shopping facilities in cities such as Ahmedabad, Hyderabad and Bangalore. Mr Fischel, who has been with Liberty since its nascent stage in 1985, took time off from his whirlwind India trip for an exclusive chat with ET.

You have achieved significant growth in a short span. But why does 85% of your asset portfolio lie in regional shopping centre assets?

We firmly believe in the need to specialise and have increasingly focused our activities on areas where our expertise produces competitive advantage. Because of this, our shopping centre assets have grown from GBP 500m to over GBP 6bn in the past 12 years. Our total property assets are now over GBP 7.5bn, with regional shopping centres comprising 85% of our portfolio. The mall business has proved over time to be a tremendously stable and resilient business and an excellent way of locking into real growth of the economy.

Do you think you can maintain this rapid growth going forward?

We certainly plan to. We hope that India will be a key driver of this growth for us. The opportunity which India presents for development in many sectors of the economy, and especially in retail, is quite extraordinary. We think the Prozone-Liberty shopping centre business model can add significant value to the emergence of organised retail in India. And if the retailers here agree with us, we should be able to enjoy high growth rates long into the future.

There is a perception that there is no room for the smaller players in the UK context.

Strong competition has created winners and losers, with some very large players emerging in certain retail categories. But the taste of UK consumers has not changed. They still want to see a broad retail offer. So, there is still room for strong national players and independent retailers providing a genuine shopping experience.

Has the emergence of centers like Lakeside influenced a change in lifestyle in the UK?

First, let���s not forget that any centre is primarily serving a consumer within a 20-25 minute commuting radius. But what we���ve seen is a lot of other mixed use development evolving around our centres, such as residential and commercial development which has actually added to the catchment area over time. Quality retail real estate has a great economic multiplier effect and is an engine driving overall GDP growth.

As you have visited India several times in search of a partner, what would be your advice to foreign retailers looking to enter this country?

Take time to identify the right local partner. While we bring a lot of our own experience into the business, we recognise the importance of local knowledge in making the entire business model a success. Secondly, in selecting locations, one needs to look over a longer term horizon and recognise that a lot of new destinations will be built over the next few years that will perhaps be more suitable and cost effective than the locations hitherto available in India. It is certainly our intention to provide retailers, both in India and new entrants from abroad, with world class infrastructure at a price that is affordable.

What do you feel about the Wal-Mart, Bharti venture in India?

I don���t want to comment specifically about any retailer. But I think this announcement, along with the investments that large Indian companies are also making in retail, will focus everyone���s mind on developing both real estate and retail formats that will be suitable for the Indian consumer.

What is your assessment about the Indian market?

India has surprised me all the time. It���s the most fascinating and engaging country I have ever visited. It���s always a pleasure for me to come here and I invariably learn something new which I can in turn take back and share with my colleagues in other countries. India truly is a force to be reckoned with in the future.