JONES LANG LASALLE MEGHRAJ LAUNCHES EXCLUSIVE ‘LET’S TALK’ PLATFORM FOR RETAILERS AND DEVELOPERS TO RESOLVE ISSUES

Mumbai, December 11, 2008 – Retailers and developers faced off in a meet arranged by Jones Lang LaSalle Meghraj at the Hyatt Regency, Mumbai. This in-camera event, aptly labelled ‘Let’s Meet’ was arranged on the heels of the CII Indian Retail Forum 2008 that took place at the same venue. Close to a hundred Pan India developers retailers attended.

‘Let’s Talk’ was a platform facilitated by Jones Lang LaSalle Meghraj to catalyze a dialogue for the success of the retail industry - a forum where both the key constituents – retailers and developers - engaged in a collaborative dialogue to understand challenges and issues, and to arrive at possible guidelines. It was a platform whose penultimate goal was to ensure success for this industry.

PROBLEMS BESETTING THE INDUSTRY:

• The seismic effect of the global economic crisis has decelerated the retail sector, causing anxiety and stress for retailers and developers alike.
• Adverse actions such as cost rationalization, suspension of expansion plans, exiting from unviable business units etc. are being taken by retailers across the country.
• Developers/landlords are also facing the brunt of this financial ‘Armageddon’. They are in panic mode and resorting to short-term measures for course correction. Some of them are stalling ongoing projects, facing problems with getting brands/tenants at their terms, experiencing loss of footfalls in their malls and - worse still – witnessing the exit of brands/retailers from these mall. The result? Loss of reputation and rent - a source of steady revenue for the developer.

Jones Lang LaSalle Meghraj took the initiative of putting them together at ‘Let’s Talk’ this event to help them take steps to counter the fallout. As a measure to maturely intervene in the terse situation, ‘Let’s Talk’ had a definitive cross-section of the developer and retailer communities take a closer look at their concerns.

The cost of property, especially the ones signed in 2007, was a highlight. Collaboration, communication and transparency in dealings were some of the core focus points, and avenues were sought for opportunities to strengthen relations in times of distress. At ‘Let’s Talk’, developers and retailers put the value aspect in uncompromising focus, taking a hard second look at non-essentials as a short-term strategy.

OTHER ISSUES DISCUSSED:

• Common Area Maintenance (CAM) charges
• The revenue sharing model
• Impacted Tier II/III city retail growth
• Reneging on agreements
• Mall design – not in tune with retailer’s needs
• Delays in delivery of projects, impacting retailers’ expansion plans

Kishore Biyani, spearhead of the Future Group, found himself arbitrating a number of burning issues even as Anuj Puri, Chairman & Country Head, Jones Lang LaSalle Meghraj, steered the animated discussion into relevant sectors. Some of Mr. Biyani’s insights during ‘Let’s Talk’:

• “We are still in the first phase of the retail experience. Nobody as yet knows the right size of an Indian mall – various concepts have been tried, but it is evident that not all malls are doing well. Now, there’s a reality check happening”

• “Currently, everybody wants to be cash-flow positive. This is going to create problems for the entire retail industry. Retail is not a short-term business. It is pointless to look at anything below a 10-year horizon.”

• “As a retailer, our job is to build demand and convert marginal shoppers into real shoppers.”

• “To make the Tier II/II city retail story viable again, malls must be centrally located, of the right size and featuring the appropriate tenant mix. There must be a carefully calibrated mix of regional and national brands. Also, there is no potential for over-building in these cities. Only 20% of a Tier II/III city’s population actually visit malls, and even less than that actually shops there.”

• “India is not like the US, where everyone goes to malls and everyone spends in them. We must look at our own consumer dynamics and design malls accordingly.”

• “We need to do a case study of Select City Mall at Saket and highlight it as the outstanding success story in Indian malls.” (Jones Lang LaSalle Meghraj will undertake Mr. Biyani’s suggested case study of Select City Mall at Saket to facilitate a better understanding of what works and what doesn’t in Indian malls.)

• “If I knew everything there is to know, I would not have made a film called ‘Na Tum Jaano Na Hum.”

Rasesh Kanakia, Chairman of Cinemax India:

• “Mall development in India is haphazard and beset by delays due to regulatory limitations. These delays cause multiplex owners to have to bear the brunt as they have fitted out the screens and incurred heavy capital costs.”

• “The multiplex is in the worst part of the mall, and that it incurs the highest fit-out costs. Multiplex rentals and CAM charges should be subsidized, considering the fact that the multiplex brings footfalls to the top levels of the mall.”

Mr. Kanakia also advocated a revenue sharing model – a recurring theme brought up by retailers throughout ‘Let’s Talk’ – and one that was hotly contested by developers.

Dharmesh Jain, CMD Nirmal Group of Companies -

• “We should address the key question of whether we will respect a contract or not. Renegotiation is happening far too easily in a atypical and temporary economic downturn. Let us agree to honour commitments made and bank on our collective power to move the Government for positive changes. We as real estate developers have already achieved many milestones in that respect over the past three months.”

Suresh Singaravelu, Chief Executive - Retail & Corporate Planning of Prestige Group:

• “Much of the ambiguity about CAM charges derives from the fact that malls are not designed appropriately, thereby resulting in energy wastage for which retailers finally have to pay. The Reliance Group has tackled this problem in Delhi – by using air-cooled chillers run on reclaimed sewage water instead of air conditioning. While there is no control over land and development costs, such innovations can be more widely introduced to reduce the burden of high CAM charges.”

Anuj Puri wound up this highly synergetic discussion by remarking that retail is a strong proxy for the economy, as it reflects final consumption. He pointed out that as final consumption gradually improves, it will not only help the retail sector recover but once again drive economic growth, as well. He assured the delegates that Jones Lang LaSalle Meghraj would make the ‘Let’s Talk’ open discussion forum a continuous effort, ensuring that developers and retailers have a viable dialogue platform at all stages.