Island Star Mall Developers Pvt. Ltd, a platform set up by listed developer The Phoenix Mills and Canadian Pension Plan Investment Board (CPPIB), has bought a land parcel in Bengaluru for Rs 650 crore ($100 million).
This marks the platform's second acquisition.
The platform will initially develop at least 1 million square feet for premium retail in a bid to cash in on the growing retail and commercial market in the IT city.
Bengaluru's office market has been on an upward trajectory, fuelling demand in retail and to some extent in the residential segment.
“Bengaluru is amongst the most preferred cities for retailers given the high percentage of the population in the working age group," said Shishir Shrivastava, joint managing director, The Phoenix Mills. "The catchment area around Hebbal has seen the launch of over 40,000 residential units since 2014. Moreover, the area has an occupied office space of over 20 million square feet which translates to a working population of over 2.5 lakh."
CPPIB and The Phoenix Mills had last April struck a platform deal to develop, own and operate retail-led mixed-use developments in India.
The platform had last August bought a land parcel in Pune with a development potential of 1.8 million square feet for Rs 160 crore ($24 million).
Shrivastava said that the Pune and Bengaluru acquisitions mean that the investment alliance has already committed a significant portion of the equity funds at its disposal within a year of setting up the platform.
CPPIB had said that it would initially own 30% stake in Island Star for an equity commitment of Rs 724 crore and would pump in Rs 1,600 crore across multiple tranches to own up to 49% in the strategic tie-up.
Island Star holds Phoenix MarketCity Mall in Bengaluru, which was Phoenix’s contribution to the alliance.
CPPIB, which has invested about $3 billion in India since 2010, has been ramping up its India play over the past couple of years.
VCCircle reported last year that the Toronto-based pension fund plans to invest as much as $1.2 billion (Rs 7,700 crore) in a joint venture with Indian developer IndoSpace to acquire and develop logistics facilities in the country.