CapitaLand Divests Stake in Indian Mall Portfolio for $54M

CapitaLand is selling its stake in six malls and a 50 percent share of a mall management company in India for $53.8 million, according to a statement released Friday. The Singaporean property giant is selling off its share of the portfolio to its Indian partner in the joint venture projects, Prestige Group, ten years after embarking on a $780 million cooperative effort to build a South Asian retail platform.

The malls are located in six Indian cities, namely Bangalore, Mangalore, Hyderabad, Mysore, Cochin and Udaipur in Rajasthan state. CapitaLand had a portfolio of eight malls in the country, with a total of 511, 657 square meters as of March 2017.

The disposal comes just more than a year after Singaporean Prime Minister Lee Hsien Loong visited the mall in Udaipur, with Singaporean media touting the tour as “a symbol of the growing interest of Singapore’s businesses in India.”

Exit Expected to Be Completed by End of Q1

In addition to offloading its stake in the shopping centres to Prestige Retail Ventures, a subsidiary of the property group, the Singapore government-linked developer is also to sell its 50 percent equity interest in a property management company with businesses in Bangalore, Mangalore and Hyderabad to a Prestige Group subsidiary, Prestige Estates Projects, Capitaland said in the statement. The sale of the retail properties and the management firm is expected to be completed in the first quarter of 2018.

The buyer Prestige Group, based in India’s southern city Bangalore, originally formed its joint venture with CapitaLand in 2008. At the time, CapitaLand agreed to invest S$1.12 billion ($780 million) to develop and manage seven projects in the South Asian country with the Bangalore-based real estate company. Some of the projects developed under that JV are part of this sale.

Disposal Follows 2016 India Sell-Off

This is not the first time for Prestige Group to buy out its Singapore partner’s stake in a retail venture. In 2016, the group’s Prestige Estates Projects unit bought back CapitaLand’s 49 percent stake in a mall project in Bangalore for $8.5 million, before later converting the site into a business park.

This latest exit stands in contrast to the confidence that CapitaLand has earlier expressed in its Indian retail investments. In 2016 the Singapore real estate company said it was planning on expanding its investment in India and then CapitaLand Mall Asia CEO Jason Leow praised the country as the “next big retail prize after China.”

CapitaLand has not been alone in pursuing Indian retail opportunities as a foreign investor. After US investment giant Blackstone bought several malls in the country its local partner estimated that the New York-based firm might put as much as $1 billion into India’s retail real estate sector.