Thane-based builder wants to convert part of mall into corporate park  

May 28, 2010

The Siddhi Group—that developed Lake City Mall in Thane—is asking shop owners to sign a no-objection certificate so that it can lease the space to corporates

Thane-based developer Siddhi Group Developers (earlier known as Shree Balaji Builders and Developers) is in the process of scrapping part of its ambitious mall project and wants to convert this space into a corporate park. The developer is asking all people who had bought space in that particular section of the mall to sign a no-objection certificate (NOC) allowing it to lease the space to corporates.

Balaji Builders opened booking for its Lake City Mall in 2004. The mall has a total area of 5.5 lakh square feet (sq ft). Many people with a dream to own a shop in a big mall invested huge amounts and even paid as much as 90% of the total amount at the time of booking. The mall was planned to be built in two parts, block A and block B. It was expected to be ready in two to three years. However, the project was delayed beyond that due to slow construction activities.

Big brands such as Big Bazaar and McDonalds were the first to receive possession and open their shops at the Lake City Mall. However, due to delay in completion of the rest of the mall, no other big brand was interested in opening shop there. In the meantime, the developer also changed its name to Siddhi Group from Shree Balaji Builders and Developers.

Now, after taking about six years to complete the project, the developer wants to convert the remaining part of the mall into a corporate park citing slowdown in the retail industry as a reason. The Siddhi Group has been asking people who had booked shops in block B to sign NOCs so that it can lease the space to corporates. It is promising to give a minimum of Rs50 per sq ft on carpet area as rental income to shop owners. This is unacceptable to shop owners who had invested money in the property. They feel that the builder may earn more than Rs100 per sq ft as rental income from corporates but will give only Rs50 to the shop owners.

At present, the area around the mall attracts an average rate of Rs70 per sq ft for commercial office space. In addition, there is no mention of any timeframe in the NOC, which may make it difficult for the shop owner to take back possession of his property. The developer has also kept mum on matters like who will sign the lease agreement and what would be the period.

One such person Ram Mohan (name changed) had bought two shops on the ground floor of block B by paying about 90% amount of the agreed price. He is eager to open his shop in the mall. However, the Siddhi Group wants to divide block B into two parts, with about 25% area converted into a business centre and remaining 75% as a retail section.

According to sources, the builder has already started booking of the business park space without informing the shop owners. It has also blocked the 25% area. Unfortunately, Mr Mohan's shop falls in this section. He is not happy with the promised returns from the builder. He says, firstly the rate of return on his investment comes to just 0.5% per month or 6% per annum that too after a 'lock-in' period of six years. This is when he would have earned more money as pure interest income from his investment, deposited in a bank.

However, with the Siddhi Group forcing shop owners to sign the NOC, is there any option left for Mr Mohan? We asked some legal experts. According to Vinod Sampat, advocate and founder, Vinod C Sampat and Co, "If the builder does not keep up to his commitments, the owners of the properties have various methods to get the place—like issuing a legal notice, approaching a consumer court, criminal court and also police authorities.”

The claim of a slowdown in the retail industry by the Siddhi Group is also doubtful, especially looking at the higher number of footfalls in Big Bazaar and McDonalds. Even the change in infrastructure and the competing market of Thane has caught the interest of other big players like the Raheja Group and the Runwal Group. Both of them have launched KORUM and R-Mall, respectively in the city.

Officials from the Siddhi Group were not immediately available for comments. Despite calling their office several times throughout the day, we were told that the concerned officials “were in a meeting.” — Moneylife Digital Team