Deep Kantawala, Head, ICS Corporate Advisors On The Pressing Need To “Set The Criteria About Asset Management”

“There are some examples of PPP (Public Private Partnership), but nothing notable has been done when it comes to retail. There have been some examples of high street shopping and plazas. But, the fact is that it needs to be done within particular specifications. What now happens is that you do PPP, but you don't set the criteria about how to manage the asset.

One is just saying that the parking is done, and now you operate the retail but there are no criteria about how to operate. Essentially, it will become a disaster because the developer may not have the experience or the foresight. Often the project is not on a revenue sharing basis, for example, the airport, where there is clearly an incentive because there is a revenue share between the government (the airport authority) and the private operator. The more efficiently the operator functions and does more business, the government is also incentivized.

In the past, in terms of retail, the government has primarily tried to fill a gap. Even in Mumbai when they came up with the idea of using open spaces to create parking, the whole approach was not really on how to make more money out of that. The government was contending that so long as a facility is created, they would allow certain retail avenues on the top to make up for the developer's viability gap.

What we are saying is that you can achieve both—not just create a facility, but also actually continue to get annuity income that is growing in those locations. It's in the government's interest not just to be content with getting the public facilities in place, but see how those can be actually used to bring strong and healthy income.”

Vivek Kaul, Head - Retail Services India, Transaction Management Group, CBRE South Asia Pvt. Ltd On “Well Defined Rules & Timelines For PPP”

“The biggest benefit that the shopping centre industry will get from partnering with the government is just the convenience of building better spaces. Currently getting approval is one of the biggest challenges; there should be a timeline for this. People keep waiting for two years just to get an occupancy certificate. If these issues are addressed, it may be much more beneficial (to the developer) than even getting cheaper land.

SCAI or any other business bodies need to make the government understand that developers' ultimate goal is not to please the government, but to have a set of rules and timelines, which are well defined.

The biggest thing I want from the government is flexibility and quick decision-making. People should not be waiting for years to get their plans passed.

Since it's not a recognized industry, the cost of borrowings is very high. And, if you don't approve the plan for years, then the developer will die anyway.

The land is expensive, then there is cost of borrowing and he has to service that debt. So, if the government is not proactive and fast enough to give approvals, and the developers' margin keeps on reducing, then they will cut costs or jack up the prices. It's a catch-22 situation.”