Ladies and gentlemen, good day and welcome to the Q4 and FY 2025 Results Conference Call of the Phoenix Mills Limited. As a reminder, all participants' lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Management of the company is being represented by Mr. Shishir Shrivastava, Managing Director, Mr. Kailash Gupta, Group Chief Financial Officer, and Mr. Varun Parwal, Group President. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. At this time, I would like to hand the conference over to Mr. Shishir Shrivastava. Thank you, and over to you, sir.
Good evening, everyone. We welcome you all to discuss the operating and financial performance for the fourth quarter and full year ended March 2025. FY 2025 was a strong year across our core businesses of retail, offices, and hotels, which together delivered revenue of INR 3,507 crore, up 16% year-on-year, and EBITDA of INR 2,111 crore. This performance reflects the continued strength and cash-generating capacity of our core portfolio. Residential sales moderated compared to the previous year, and as a result, consolidated revenue from operations was down 4% year-on-year to INR 3,814 crore, and EBITDA was flat at INR 2,161 crore compared to FY 2024. Retailer sales across our malls reached INR 13,750 crore, which is a 21% increase over FY 2024. This impressive growth was driven by the ramp-up of our new malls, particularly Phoenix Mall of the Millennium and Phoenix Mall of Asia, both of which saw strong improvements in sales, occupancy, and consumption.
Ahmedabad also stood out with a 65% increase in consumption. Reflecting this momentum in consumption, retail income for FY 2025 rose 18% to INR 1,951 crore, and EBITDA grew by 20% to over INR 2,000 crore for the year. We also made substantial progress in our commercial office portfolio with our offices, Phoenix Asia Towers in Bangalore and Tower 3 of Millennium Towers at Pune, receiving occupation certificates between January and April of this year, and three leasing pipelines building up strongly across Pune, Bangalore, and Chennai. We are excited about the high-quality, future-ready office products being developed, which are now attracting interest from reputed domestic and global occupiers for their regional headquarters. Our hotel portfolio too delivered a strong performance, with EBITDA up at 11%, and the St. Regis Mumbai crossed INR 500 crore in revenue for the first time in FY 2025.
The strong financial performance of our core annual portfolio has translated to strong operating cash flows of nearly INR 2,100 crore. These cash flows have been prudently deployed into strategic land acquisitions across Coimbatore, Chandigarh, and Bengaluru, and ongoing construction across several projects primarily. Densification across our existing assets continues to be an important value creation strategy for us. We are forging ahead at Phoenix Marketc ity, Bengaluru, with the Grand Hyatt expansion of the retail, plus addition of approximately 1.2 million sq ft of offices. Continuing with this theme, we have secured additional development potential at Lower Parel during the quarter. We have secured FSI of approximately 136,000 sq m for a premium payment of approximately INR 586 crore during quarter four. Varun, may I request you to take this forward?
Sure, Shishir. While Shishir has taken you through the annual performance, I'd like to focus on quarter four and share some highlights from our retail portfolio.
Sorry, Varun. Varun, sorry to interrupt, can you just take forward the discussion on the FSI for a moment?
Sure. Sure, Shishir. So, as Shishir mentioned, we have secured additional FSI of approximately 336,000 sq m at our Lower Parel development for a premium payment of approximately INR 3,586 crore during quarter four. We have funded this through internal accruals and available liquidity on our balance sheet. Development planning for the additional FSI is currently underway, and we will share further updates once the asset mix is finalized and as we progress towards securing the requisite development permissions. Let me also take this forward and share highlights on our quarter four performance and some highlights specifically from our retail business, including consumption trends, leasing updates, and how we are shaping the portfolio for future growth. During quarter four, our retail portfolio recorded consumption of INR 3,248 crore, reflecting a 15% year-on-year growth.
Importantly, even excluding the newly launched malls in FY 2024, like-for-like consumption growth across the portfolio stood in excess of 8%, underscoring the sustained strength of our discretionary retail ecosystem. Retail income for the quarter was INR 482 crore, which is up 8% year-on-year, while EBITDA stood at about INR 499 crore, reflecting a 11% growth. We have received a few questions regarding the gap between our consumption growth and rental growth in quarter four. This gap, in my view, is largely attributable to the ramp-up phase of our newly launched malls, particularly Phoenix Mall of the Millennium and Phoenix Mall of Asia, where consumption is scaling up sharply. Now, typically, our lease structure provides for the higher of fixed rental revenue share, offering downside protection from day one.
However, rental income begins to reflect the upside only once store levels exceed the minimum guaranteed threshold, at which point revenue share component also kicks in. As more stores mature and scale up in these malls, we expect this to translate into stronger rental growth over the coming quarters as well. Additionally, at Phoenix Palladium, we are also in the process of revamping part of the courtyard retail zone, which led to the temporary shutdown of about 100,000 sq ft of leasable area in quarter four. This zone historically has contributed about INR 200 crore in annual consumption and about INR 40 crore in rental revenues. The impact attributable to the shutdown of this store during quarter four was approximately INR 40 crore on consumption and about INR 7 crore on rental income.
Moving on to within Phoenix Palladium, one of the highlights of the quarter was the strong performance of the West Zone at Phoenix Palladium, which we launched in late 2024 with the launch of the biggest Uniqlo store in South Mumbai and the addition of new age anchors such as Lifestyle. For quarter four, a remarkable standout moment was the launch of Bershka's first store in India, which incidentally also achieved the highest single-day sales globally for this brand on opening day. We also welcome flagship stores across categories, including Nykaa Luxe, T ira, Gap, Levi's, Celio, Navyasa, Masaba, etc. And we are also set to further enhance this zone with the upcoming launch of our Gourmet Village concept, which is a two-level curated F&B and entertainment experience. We are also actively executing our premiumization and repositioning strategy across Phoenix Marketc ity centers in Mumbai, Pune, Chennai, and Bangalore.
At Phoenix Marketc ity, Bangalore, trading occupancy declined in quarter four due to the planned closure of a hypermarket spanning about 65,000 sq ft in chargeable area. Further, about 30,000 sq ft of the mall also underwent fit-outs for new brands. Both of these planned changes have in aggregate resulted in a 10% occupancy drop in Bangalore, but they also enable us to create a space for a better tenant mix going forward. Further, at Phoenix Marketc ity, Pune, we saw a 2% dip in occupancy. This was following the planned exit of a couple of anchor stores in the home furnishing and fashion category, along with the planned churn of a few restaurants. Also during the quarter, at Phoenix Marketc ity, Mumbai, we have about 5% of the leasable area, which is currently undergoing renovation and densification, and it's part of an ongoing brand churn for the repositioning effort.
All our Phoenix Marketc ity malls are being revamped deliberately to improve brand mix, shopper experience, and long-term rental profile. While this has resulted in short-term dips in trading occupancy, we expect these interventions to unlock meaningful consumption and rental upside over the next 12- 18 months. Let me also give you a quick update on April 2025 and our outlook for FY 2026. April is typically a lean month, but we have continued to see strong momentum in retail sales, with retailer sales expected to cross INR 1,130 crore for this month. This reflects a 14% year-on-year growth, and to our minds, it confirms the depth and consistency of consumer demand across our portfolio. Looking ahead to FY 2026, a key focus will be on strategic leasing and brand evaluation across our portfolio.
We are prioritizing right-sizing, relocations, and churns aimed at bringing in new age anchors while also creating space for premium categories across jewelry, watches, cosmetics, and accessories, as well as new fine dining experiences. Overall, we remain confident of delivering strong double-digit growth across our retail portfolio in FY 2026, underpinned by sustained demand, proactive planning, and the continuing evolution of our brand and experience proposition. Moving on to our commercial offices, I'm pleased to share that our under-construction office assets have also made meaningful progress in FY 2025. For the year-ended March 2025, income from our operational offices in Mumbai and Pune stood at INR 210 crore, up 10% year-on-year, and EBITDA grew 19% year-on-year to INR 131 crore.
Our office strategy is built on three pillars, the first pillar being strong regional leasing teams with deep tenant relationships, the second pillar being product design that prioritizes collaboration, wellness, and sustainability, and the third pillar being differentiated experiences from arrival areas to integrated lifestyle offerings through our retail ecosystem. Millennium Towers, our prime office space in Pune, has three towers in total, aggregating to 1.3 million sq ft of chargeable area. As Shishir mentioned earlier in the call, we have received the occupation certificate for one of the towers, and occupation certificates for the remaining two towers are expected later in 2025. Pre-leasing activity is underway with an active pipeline of over 500,000 sq ft in discussions at this moment.
Phoenix Asia Towers in Bangalore also received occupation certificate for 800,000 sq ft of chargeable area, and we are seeing very encouraging leasing discussions here as well with a significant pipeline. Our next major delivery plan for 2025 is One National Park in Chennai, aggregating to chargeable area of 600,000 sq ft. Between Bangalore and Chennai, we have pre-leasing conversations ongoing for almost 800,000 sq ft. With world-class creative offices featuring offering features that seamlessly amalgamate productivity with lifestyle now in place and institutional leasing efforts gaining momentum, we are confident of a stronger leasing outcome in FY 2026. Moving on to our core portfolio, the core portfolio has delivered a strong performance once again this year, with income rising to INR 580 crore, up 6% year-on-year, and EBITDA growing by 11% to INR 266 crore, reflecting an overall healthy margin of 46%.
The St. Regis Mumbai continues to set the benchmark for experience and luxury in Lower Parel, crossing INR 500 crore in income to reach INR 523 crore overall in revenue. This was driven by a 13% increase in revenue per available room and an impressive occupancy rate of 86%, up 3 percentage points over FY 2024. Courtyard by Marriott Agra had also a good year with EBITDA coming in at about INR 18 crore and a margin of about 32%. I would now like to invite Kailash to take you through the rest of the highlights.
Thank you, Varun. Let me start with the residential segment. Coming to revenue segment, so gross sales during the year was INR 212 crore, with a collections of around INR 290 crore, so more or less same. And in Q4, we have recognized the revenue of INR 96 crore. This is primarily coming from One Bangalore West and Kessaku, which are ready towers available now. And the average realization was around 26,000, very strong reflection, sustained demand for premium product. This is something which is proved by this year's number and realization especially. We continue to vouch for the timing and approach for future residential launches, including Tower 8 and 9 at One Bangalore West and our Alipore project in Kolkata. And both of these projects are scheduled to launch during the FY 2026, maybe in the Q2 and Q3 around that time. Quick recap on the consolidated and the standalone numbers.
On the financial performance side, revenue from operations across our core businesses, which is retail, office, and hotel, was at INR 3,507 crore, up by 16% versus FY 2024. EBITDA also reflects a similar growth and is stood at INR 2,111 crore. At the group level, revenue from operations was at INR 3,814 crore, down by 4%, and EBITDA at INR 2,161 crore, which is flat as compared to the FY 2024. Consolidated net profit for FY 2025 was at INR 1,302 crore, down by around 2%. However, after adjusting for share of associates and minority interest, profit after tax for Phoenix Mills came at INR 984 crore, which was down by around 10%. On a cash flow of CapEx side, cash flow remained strong at INR 2,084 crore from the operations during this year. Our aggregate CapEx in FY 2025 was around INR 2,600 crore.
Out of this, around INR 1,600 crore has been invested in the three land parcels, namely Coimbatore, Chandigarh, the Bangalore, the Millennium, and the FSI, which we have bought recently in the Lower Parel area. And around INR 1,000 crore we have incurred towards the construction at various places across the country and to densify our growth in the existing assets. Importantly, despite these deployments, gross debt at the group level has remained at the same level as compared to the last year. So we are around INR 4,400 crore, lower than FY 2020 levels, which is pre-COVID level. So we are still fully in control in terms of debt. And our net debt to EBITDA ratio is around 1.2 x, I think one of the strongest in the industry.
We are putting a lot of efforts to reduce the cost of the debt, which has come down from 9.2% to 8.5% in the last few years. Overall, we have continued to maintain a prudent balance sheet and a disciplined capital deployment, which gives us a significant headroom to continue investing in high-quality assets while maintaining financial flexibility. Let me take you toward some of the highlights for Phoenix Vision 2030. Over the past two years, we have secured key land parcels and commenced construction activities across our multiple sites, laying a strong foundation and visibility for our portfolio additions over the next five years. I'll take you slightly in the past. So our first wave of expansion came between 2011 and 2013 when we launched the Phoenix Marketc ity malls in four cities. Then the next wave started in 2020 to 2025, where we have launched five new malls.
Again, these malls are now able to see the strong consumption across and also establish the premiumness of our brand. We are also expanding retail at Phoenix Palladium, which led to retail leasable area grown from six million to 11.5 million. So this is what the current situation in terms of the retail is. And in the next, today, with new retail mixed use development underway at Kolkata, Surat, Coimbatore, Chandigarh, and Thane, as well as the further expansion at Phoenix Palladium, Lower Parel, Mumbai, and Bangalore, we are looking to add around seven million sq ft of leasable area to our operational retail portfolio by 2030. So this will take us from 11.5 million to around over 18 million sq ft in the retail side.
In parallel, we are also exploring opportunities to integrate complementary asset class, such as offices, residential, and hotels, within some of our core retail sites to further densify our developments. Our focus remains consistent to build a high-quality destination and offer shopping experience, work environment, residential, and venues for leisure, backed by the strong governance through design and disciplined capital allocation. This brings me to the end of Q4 and FY updates from the management side. We can now open the floor for the questions and answers.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Puneet from HSBC. Please go ahead.
Yeah, thank you so much, and some decent performance. My first question is on the multiple interventions that you are doing on your mall portfolio. How long should we think the impact to last for those, and what kind of CapEx will that entail?
Hi, Puneet. Varun this side. When you are asking about the impact, are you asking about the time it takes to reopen the new spaces?
Yeah, correct. So some spaces are gone, for example, in Palladium, in High Street Phoenix. Bangalore also, you alluded some stabilization. Pune as well, some, I think, change in occupancy is what you indicated. So how long will that rejig exercise take before we start seeing, again, decent growth there?
Okay, so I will take both that question, Puneet. I think in terms of some of these spaces coming back, Bangalore and Pune, you will see the spaces coming back with new formats and new brands within the next six to nine months. Some of them are already actively under fit-out, and some are kept ready, and we are just finalizing the lease agreements for new tenants to move in and commence their fit-out. At the same time, when we are talking about Bangalore, we are also adding and operationalizing the third floor in Bangalore during this year, second half of this year, which is a new retail area of about 170,000 sq ft, which will house an exciting mix of F&B and some new-age anchors opening their first-time stores within our mall portfolio, and that will also enhance the overall area.
Together with the planned churn and revamp that we have, I think FY 2027 should prove to be a very strong year for Bangalore in terms of consumption, both on account of new brands as well as additional area. In Phoenix Marketc ity Pune, at this point, we are not adding any new area. But in Phoenix Marketc ity, Mumbai, for example, we are adding about 50,000 sq ft of new area, which again is being added within the current development of the mall. The time to make it operational is very quick, and you should see the impact of it by the end of this financial year. Now, when we come to Phoenix Palladium, Mumbai, there is the new zone that we have added, which is Rise 2, which is about 250,000 sq ft, and which should become fully operational by June of this year.
Currently, the retail stores are operational, which are on the ground, first and the second floor. The F&B and entertainment floors are under fit-outs, which we would see a staggered opening between now and June, July for the various F&B villages and entertainment destinations there. The courtyard retail, which is undergoing revamp, that together with what we are doing in Rise 1 in terms of retail and the revamp of the lifestyle block, I think we will in aggregate add about 450,000 sq ft of new retail area. Again, I don't want to put up very we would give more updates on it in the coming quarters, but I think you should see the new retail space coming through in the next two years, so eight to nine quarters from now.
So you said 100,000 sq ft down and plus 450, or is it 450 in addition to the 1,000 which will come back?
Rise 1, Puneet, is about 200,000 sq ft, as we have disclosed previously. Between the revamp of courtyard retail and Lifestyle, we will add about another 250,000 sq ft. In aggregate, you would have another 350,000 sq ft of additional retail area in Phoenix Palladium.
Understood. That's really helpful.
I would just add that new area, as well as new-age brands, actually drive a significant upside in trading densities and consumption profiles across our malls. We are already seeing that with the addition of these new anchors in Rise 2, sorry, in West Zone at Phoenix Palladium, where the usage is much stronger.
When does Rise 1 come?
When does Rise 1 come with this 458,000 area? Timeline for that?
Puneet, two years from now.
Okay. Two years. Understood. Great. That's very helpful. Secondly, also, if you can comment on Citadel and Palladium Ahmedabad, which have done some bit of tenure, and have they achieved peak there in terms of near-term trading density, or is there a significant initiative being taken out to further push up the momentum?
I think Palladium Ahmedabad has done extremely well, and the ramp-up has been quite exciting to see in Palladium Ahmedabad. During the coming year, we, in fact, expect occupancies to further increase from the current 95%. The entire area is leased up now, and we have also given space to some exciting new brands. In the four-year impact, I think you should continue to see the proposed growth in Palladium Ahmedabad. Palladium Ahmedabad has established itself as a new modern premium destination for the city. With our brand mix and marketing programs, I think this should perform quite well in the coming year as well. Indore as well, while the growth has been a bit muted during this year, it has grown in double digits. We would have expected the growth to be much stronger.
But I think there are some very exciting infrastructure developments in Indore, with the authorities constructing multiple highways on all sides of the mall. There is a bit of a constraint in access to the mall at this point in time. But with the highway activities scheduled to be completed in the next 12 months, we believe that access to the mall will improve multi-fold, and we should see very strong growth in consumption going forward in Indore in FY 2027 and beyond.
Understood. That's very helpful and just last question, and then I'll come back in the queue. If you can also talk a bit more on the commercial office space leasing, should we expect material leasing to happen in FY 2026, or does it look like more an FY 2027 pickup event?
I think in terms of leasing, Puneet, you will see material leasing happening in FY 2026, especially, I think, if I add the pipeline that are under active discussions between Pune, Bangalore, and Chennai. We are talking about 1.2 million sq ft -1.4 million sq ft of leasing discussions going on across these three new offices, and we should see significant conversions during this year.
Understood. That's really helpful. Thank you so much and all the best.
Thank you.
Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Saksham Mongia from Dymon Asia . Please go ahead.
Yes. Thank you for the opportunity. I have two questions. First is related to, with the consumer demand, moderation, and rising competition in real estate, are you seeing increased instances of rental negotiations or brand exits? How does this compare to the past cycles that you have seen, and what actions are you taking to protect trading density and rental lease going forward? Second, with the global supply chain disruptions and macro risk, how are you managing exposure across international brands and domestic brands, and which categories or tenants appear to be most vulnerable in the current environment? These two questions from my end.
Hi, Saksham. Thank you for your questions. I think to your first question, Saksham, I would say that our malls have established a very strong and a credible performance track record over the last several years, and we just don't create great malls. We actually create destinations where we engage deeply with tenants and consumers to drive a differentiated experience. We continue to invest in future-proofing our retail destinations by adding complementary asset classes such as offices and hotels, and with improving infrastructure and brand profile, we remain confident that our malls will continue to do well going forward as well.
Thank you. And on the macro?
I think on the macro, Saksham, at any point in time, we retain a very balanced approach. We don't have overexposure to any one particular category or group, and we maintain a balance between both exposure to domestic brands as well as international brands. My view is that India is a luxury market or is a retail market of significant size and scale, and it remains quite underpenetrated. So it is a market which is going to remain in focus for all tenants, both global as well as domestic. Impact, if any, there are better placed people to comment on it than us, but impact, if any, I think it's going to be limited and restricted for the short term. We also believe that the consumer catchment across our mall portfolio has significantly densified.
With improving infrastructure, governments are increasing the development of vertical residential and commercial buildings, which actually increase the addressable population within the very immediate catchment for us. This is a story that's playing out across cities in India. From that perspective, if the catchment profile is strong and India macro story remains intact, we believe that consumption impact, if any, would be transient nature.
Understood. Thank you for the detailed answer.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Varun Thakkar from FYERS Asset Management. Please go ahead.
Hi, sir. So I just wanted to better understand the leasing agreement structures you have in your retail portfolio. I mean, specifically, how the revenue share component is structured and at what threshold it typically kicks in? So that would be my first question.
Sure, Varun. Our leasing agreements are typically structured as higher of fixed rent or revenue share, whichever is higher. Revenue share for any particular retail brand is actually driven by the margin economics for that particular category, and it could vary across fashion categories as well as, say, clothes or jewelry or watches, which tend to be high-trading categories, but they have a lower margin profile. You can connect offline with Karl and Madhurima for better clarity and granularity on this topic. They are in a great position to explain this to you.
All right. I just had a follow-up. I mean, when does this typically kick in? Is it when the total sales threshold is crossed, or is it like you have escalated thresholds? And what proportion of your tenants are currently paying revenue over the minimum guarantee in your top-performing malls?
Typically, about 70%-75% of the tenant mix hit the revenue share threshold. Now, revenue share is favored when the revenue share component crosses the fixed rent component. From that perspective, I would say that about 75% of the tenants are right now hitting the revenue share threshold at this point in time. How operationally it works is that on a monthly basis, you test based on the audited sales figures given by the retailers whether revenue share is favored or not. If any is favored over and above the fixed rent, then there is a separate billing that happens for that.
Okay. Thank you, sir. I will join back quickly. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah. Hi, team. Congratulations on a decent quarter. My first question is on consumption. So now, if I see a mature mall, so Phoenix Palladium, Mumbai, consumption is almost flat. Trading density is negative. Bangalore, again, we are seeing mall consumption is again negative, -1% for the year. Pune, there has been some growth, about 7%. So the malls are not even delivering inflation. So what is happening in these malls, and what are we doing to improve the consumption here?
Hi, Parikshit. Varun this side. I think in the opening remarks, Parikshit, we had outlined reasons for some of the impact that we saw in Phoenix Palladium, Bangalore, and Pune. So Bangalore, in particular, for example, had a trading occupancy dip of about 10%. And that is because strategically, we have taken over the area from the hypermarket, and we are creating a new anchor zone in here. Now, as you're aware, hypermarkets typically have a low trading density, and fashion stores typically will end up doing a trading density which is three to four times higher than that of a hypermarket. So the revamp of this space, along with some other areas that are under fit-out overall, should help us revive and demonstrate very strong consumption and rental growths FY 2027 onwards.
I also spoke about Bangalore getting a new area in the form of an expansion of the third floor, which will add about 170,000 sq ft of additional leasable area, which again should become operational by the end of this coming financial year. Similarly, in Pune, we have taken space from our home furnishing anchor as well as a fashion anchor, and we have replaced a few of the older restaurants. This is all with the perspective of revamping and elevating the brand experience and the consumer experience at these centers. They remain flagship centers, and they are catering to the best city center locations in each of the cities that they are present in.
With the introduction of new-age modern anchors and densification of brand stores across high-performing categories such as clothes, jewelry, watches, cosmetics, and accessories, we will remain confident of delivering strong growth from these locations going forward.
One more question.
Yeah. Sorry, if I just complete.
Yeah. Please, go ahead.
As far as Pune Palladium is concerned, Parikshit, we have also undertaken some revamp of the retail area in the courtyard section of the mall. This includes the Hamleys Store, Nike, and some other prominent retailers. So about 100,000 sq ft of the area is currently being redeveloped and revamped into a modern, new-age retail destination. That had a negative impact of about INR 40 crores directly in consumption and about INR 7 crores in rental income for the quarter. Annualized, that impact would be about INR 200 crores in consumption and about INR 40 crores in rental.
So the only question here is that the traditional consumption format somehow has slowed down, and which is the reason you are revamping towards more new-age consumption formats. But do you think you have enough to fill in because you'll have to keep re-engineering this, and then there will be a period of.
Yes. Sure, sure, sure.
Hi, Parikshit. This is Shishir. If you just look at historically, any mall which has been operating, any of our malls which have been operating for the last 15 years, you will see that it is very routine in our business to go through a significant change where we have enhanced these assets, right? So the addition of retail space, taking back older formats, these malls are evolving. Customer aspirations are evolving. Varun touched upon in the opening statement about the performance of some of our fantastic stores, Bershka, highest performance in the country, I mean, globally, ever in any store since they've launched, right? So the customer aspiration is changing. We have to keep enhancing the asset to accommodate for these newer brands which are more relevant in today's time. So you go through these cycles, and that is exactly what's happening at Phoenix Palladium, Mumbai.
That's exactly what's happening at Bangalore and also has happened in Pune. So this is very routine in our business. And because we do these things, it's like a machine, right? You have to keep optimizing it. And that's exactly what we're doing. And because we do this, we continue to see consumption growth high for a relatively long period of time. And then again, you undergo this churn. You undergo the asset enhancement. Again, for a little while, you will see for maybe a period of two quarters, you'll see a decline or flattish consumption. Then again, you will see growth. This is very routine in the mall business.
Got it, Shishir. Okay. My second question is on, as we are ramping up and renewing the format or the pattern of consumption towards new age, there are also increasing competition in the vicinity with at least two new malls, large malls coming in, Prestige and Oberoi. It'll take three, four years for them to come. So how do you read into the competition? And do you think that that micro market is enough consumption pull that will continue to grow on sustainable basis of high single digit?
I would like to address this in two parts as you identify. One is the market; there is substantial demand. With the improving infrastructure in that area, I think a lot more people will come to this part of the city, even from places like Bandra and beyond, right? It's becoming very, very convenient. We have always taken the same approach, or we've taken the same approach that we've always executed in the past, and that has worked for us, where we want to have a great variety, and we want to compete with size and scale. Hence, we have undertaken this significant asset enhancement at Phoenix Palladium, Lower Parel. What we are building there, what the kind of brands that are likely to come there are going to be one of a kind.
We hope to be in pole position with all of these actions that we're taking in that market.
Okay. And just lastly, on the Thane asset enhancement plans, I think you've put a slide out there, but when does the work start, and when do you expect the mall to become operational?
Sorry, may I request?
Yeah.
Sure. Sorry, Parikshit. May I just ask you to repeat the question? Were you asking about Thane?
On the Thane, yeah, Thane. So what do you want to do with the Thane, and when do you really break the ground on that asset?
Parikshit, it's going to be a retail-led mixed-use development with a retail mall in a size of about 1.2 million sq ft -1.4 million sq ft. We have secured most of our approval permissions at this point in time. In fact, the demolition of the old factory structures is currently underway, and we will start preparing grounds for commencing excavation very soon. In terms of operations at this point in time, I would say that a launch should be somewhere towards the end of FY 2029, keeping enough safeguards in terms of both approval timelines and construction timelines.
Thank you. Sorry to interrupt, sir. I would request you to rejoin the queue for your follow-up question. Ladies and gentlemen, please limit your question to two per participant. If you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Murtuza from Kotak Securities. Please go ahead.
Yeah. Hi, Varun. Nice to see you. Just a question on the commercial piece. In the more near term, you've got a lot of commercial real estate which is getting its OC. You talked about the leasing pipeline, but is there any agreements which have been signed which could start contributing to rentals this year? Or a lot of that pipeline still needs to convert to formalized agreements. And so the rental contribution from the commercial piece would only start more in FY 2027. Just a clarification on that.
Sure. If I may take that question, Murtuza, maybe I should have mentioned it in my remarks. We have done leasing of about 120,000 sq ft, and those spaces are currently under fit-outs, with a couple of the smaller spaces commencing their rent payments in quarter four. It's a smaller contribution at this point in time, but from second half of this year, you should start seeing a more meaningful contribution both from the area that we have leased as well as the new discussions that are underway right now.
Okay. Okay. So it's going to be more towards the end of the fiscal in terms of the incremental office spaces contributing to rentals, and a full-year benefit should be more FY 2027. Is that fair?
Yes. I think considering both the agreement timelines and the fit-out timelines, I would presume that you should see a more meaningful contribution from quarter three of this financial year.
Okay. Thank you.
Thank you. The next question is from the line of Parvez Qazi from Nuvama Group. Please go ahead.
Good afternoon, Varun and Shishir. So two questions. First, would be great to get some more details on the additional FSI purchase that we have done in Lower Parel. And second, I mean, excluding this FSI purchase, if we total up all your other plans over the next five years, I mean, by FY 2030, what is the total CapEx which we'll need to develop all those assets? Thank you.
Sure, Parvez. Varun this side, I will take the question on the FSI and Lower Parel, and then I will hand it over to Kailash to comment on the CapEx part. I think overall, as we mentioned, we have acquired about FSI development rights of about 136,000 sq m, which is at a consideration of about INR 585 crores. At this point in time, we are currently in our design development stage and finalizing the asset mix that we intend to add to the Lower Parel development. We are still in early stages. So as we progress on our designs and plans, we will share more details in the coming quarters. I would now ask Kailash to come in and comment on the CapEx part.
Parvez, as you've seen in the past, for the last three years, on average, we are doing around INR 1,000 crore- INR 1,200 crore annual CapEx. I think this will be maintained even for the next five years for sure. I mean, of course, any other acquisition or a bigger FSI purchase will be over and above that. But on a construction side, the number should be restricted to around INR 1,200 crore every year for the next five years.
Thanks. I'm all the way.
Thank you. Ladies and gentlemen, that was the last question for today. With that, we conclude today's conference call. On behalf of Phoenix Mills Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.