PROJECT PROFILE
ON
DEVELOPMENT OF NIGHT LIFE ZONE AT URBAN ENTERTAINMENT CENTRE, VELI
Prepared by:
INKEL LIMITED
2012
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PROJECT PROFILE FOR NIGHT LIFE ZONE AT UEC, VELI
1. INTRODUCTION
1.1. About INKEL Infrastructures Kerala Limited (INKEL), a Public-Private Enterprise was formed by Government of Kerala (GoK), with 26% stake and 74% with private participation - general public, NRKs, institutional investors etc. Primary objectives of INKEL are to promote, set up, operate and deal with infrastructure facilities, projects and ventures across sectors including SEZs, industrial parks / estates, knowledge parks, roads, rail, port, airport and other facilities. INKEL also acts as a key link between GoK and private sector in facilitating and developing infrastructure, primarily in the State of Kerala. 1.2. Brief of the Project A world class Urban Entertainment Centre (UEC), an integrated Tourism Destination as per the earlier scheme envisaged by TRKL in 18 acres of land adjacent to the Veli Boat Club. The centre is designed to have a mix of entertainment, commercial components and tourist accommodation facilities under a single umbrella. The Tourism Project is envisioned and packaged as a “One Stop Family-oriented Entertainment Destination with a Dynamic mix of Arts, Culture, Convention, Leisure & Learning with the right Balance of Entertainment & Retail (shopping and recreation) blended with variety Food Experience and Marine Aquarium as a major attraction to form an overall experience to lure the Locals & Tourists Alike” . The proposed Urban Entertainment Centre shall provide premium Urban Public Space & Urban Entertainment components which are much needed by the current city infrastructure, catering to the people of all walks of life. With the close proximity of the Veli railway station, the International Airport and the Techno Park, the proposed UEC shall attract Tourist and High Net worth individuals. The project site with its serene natural setting and access to the sea front has a potential to be developed as a quality Public Space” for the city, a complementary infrastructure to the urbanization of Thiruvananthapuram. 2. MARKET VIABILITY
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Urban Entertainment Centers have combined both the shopping and recreation with entertainment to offer an overall experience to the visitors. Retail needs the entertainment to draw people in and entertainment needs retail to support the overall operation. Hence UEC falls on the crossroads of both the entertainment and retail industry. The entertainment and recreation components in UEC consist of Multiplexes (Movie halls), Theme parks, etc. Over the past three decades, Trivandrum has been well developed, and now figures prominently on the world tourism map. The city has witnessed around 27.94% (nearly two hundred thousand) and 9.45% (nearly 1 million) increase in the arrival of foreign and domestic tourists. The demographics, trends and issues are pertinent to the current and future context of provision to meet demand at the proposed Family Entertainment Zone. •
Trivandrum is witnessing explosive development driven by megaprojects like the Vizhinjam Port, Technocity, Technopark expansion, IISER, industrial parks and so on
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An estimated 300,000 jobs will be created in the next 10 years
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Expansion of the city area and migration will boost the population to about 2.5 million by 2016 constituted and characterized by High Net worth individuals, Rapid migrating population growth, Higher than national average young population, Large proportion of families
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Culturally diverse community demographic with an array of leisure interests
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A greater awareness of leisure opportunities with a focus on culturally-oriented pursuits and capacity to access opportunities
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Use of private provision facilities and a willingness of individuals to pay for an expectation of higher standards of provision and programming
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Longer operating hours
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Growth and ageing of the population has led to an expanded level of demand for leisure opportunities
To harness this opportunity INKEL proposes to establish a state-of-the-art Family Entertainment Zone as part of the proposed UEC to tap business tourism segment. The project is structured as an institutionalcum-tourism infrastructure project and would have substantial leisure facilities to provide fillip to tourism growth in the region and a wide array of revenues to the investor. This project profile indicate investment opportunity in the Night Life Zone of the Family Entertainment Centre of the proposed UEC at Veli.
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3. PROJECT PARAMETERS
3.1 Capacity/Area The FEC comprises thematic restaurants, cabaret theatres, discotheques, comedy and jazz clubs, flexible performance spaces, TV/Video studios, an art gallery, retail stores and food & beverage outlets. The Concept design for the FEC comprises of development with entertainment establishments located on the higher floors to give good views of the Lake, the Beach and the estuary. The ground floor is planned as an open and public arena with event spaces, amphitheatres and public art spaces. The FEC will tentatively have ground plus 4 floors in total. The Ground Floor shall be earmarked for Retail outlets (500 sq ft – 2000 sq ft). The entertainment zone shall spread across the first, second and 50% of the third floor and the first and second floor shall be ear marked for dry rides and indoor games. The 50% of the third floor shall house the water fun pool and balance 50% of the area is earmarked for Indoor swimming pool & related facilities. The fourth floor will be set apart for Multiplex and Food Court. 40,000 sq ft of terrace of the FEC shall be earmarked for Night Life Zone. The roof is where the late-night action will take place. This might just be the mother of all roof terraces. Designed to have multiple levels of cascading terraces laden with vegetation, roof terrace areas are exempted from development controls, to maximize space and create a kind of tropical architecture. The concept for the FEC will be 'grounded in a Kerala context,' with ‘lush vegetation' as a major attraction. The whole building shall be raised off the ground and create a landscaped park with amphitheatres and exhibition spaces for 'spontaneous' art events. The park will draw people into the centre of the complex and then huge courtyards shaped like tornadoes 'pull people into the building'. There is expected to be a good mix of retail, F&B, entertainment and even entertainment-related production studios in the campus. The product mix will be divided into different floors or 'layers' that will sandwich the car park, the unique design would facilitate the different time zones of the entertainment centre. The FEC is expected to operate on very long hours and people who drive into the building at late at night do not have to pass the retail levels, which will be closed, to get to the nightlife on the roof. 3.2 Land
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18 acre lying contiguous to the Veli Tourist village on both sides of the Shanghumugham – Veli Road within Trivandrum City limits. The site is just 3 km from Thiruvananthapuram International Airport, and is 8km from Thiruvananthapuram city centre. The site is within 8km from Thiruvananthapuram Central Railway Station and within 1km of the Kochuveli rail terminal. The main road bisects the site into two distinct plots as follows: •
Plot No. I - 5.6790 Hectares (14.0328 Acres)
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Plot No. II - 1.5752 Hectares (3.8923 Acres)
The proximity to clean Seafront and a frontage of the Aakkulam Lake is the strength of the project site. The Family Entertainment Centre (FEC) is proposed in 3.03 Acres of land in Plot I at Veli, Thiruvananthapuram. 3.3 Utilities This would include Utilities like water, power, etc. basic infrastructure like internal roads, Parking area, Security, Sewage Treatment Plant (STP), landscaping, pedestrian streets and other services required for the complex. 3.4 Cost of the Project The estimated project cost for the development of proposed UEC at Veli would be Rs. 200 Crore. The estimated project cost for the FEC Rs. 60 Crore. The 40,000 sq ft has been earmarked as Night Life Zone and the cost to the investor is estimated to be Rs. 20 Crore. 3.5 Mode of Implementation & Schedule A JV between INKEL and TRKL with 74:26 equity participation, along with involvement of FIs, Banks, Private Investors would develop the shopping centre The Project is expected to be completed in 3 years, from the date of obtaining all the clearances and approvals, in a phased manner. INKEL would provide adequate space for the development of individual components proposed in the FEC. The individual components proposed in the FEC like retail space for shopping, food courts, entertainment zone etc could be given to respective experts in the field who have done similar work elsewhere to develop and run it on a lease rental basis. The developers of the individual components proposed in the FEC would have the right to sub lease facilities. 3.6 Project Viability
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The project is bundled in such a manner, that it is commercially viable in totality with an assured return of more than 20% for the potential investor. The location advantage of the Night Life Zone of being a part of Family Entertainment Centre in UEC close to Veli tourist Village ensures high footfall in the FEC and high occupancy rate during the first year of operation itself and changing menu and theme based dining planned shall ensure repeat visitation and hence increase in footfall and occupancy during the subsequent years of operations. Revenue Structures •
Night Life Zone - 40,000 sq ft 9 Minimum occupancy of 90% in I year of operation. 9 Expected footfall 0.8 million per annum in the first year of operation
Expenditure: •
Marketing expenses 10 Lakh in two equal installments in the first two years
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Property Tax at 0.1% of the total project cost excluding pre-operative expenses.
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Salaries & Wages at 7.5 % of the total income
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Administrative Expenses at 2% of the total income
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Utilities at 7% of the total income
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O&M Expenses at 1% of the total as Service Charge
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Annuity Expenses: Lease Rental during the operation period with 5% increase every year.
3.7 Risk Mitigation INKEL has been cautious with our projections, and has incorporated mitigation for all manageable risks. The key underlying assumptions for formulating the financial plan are slow recovery from an economic recession, modest business growth, factoring in seasonal variance in footfall, competitive pricing model, strict cost control, reasonable inventory turnover and accounts receivables. Market Risk & Mitigation •
Market Segmentation thoroughly studied and Target group identified
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Competition and Buying Patterns assessed through Competitor Analysis
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Leverage on the Competitive edge
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Selection of Right Location for this Concept
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INKEL has taken a very objective approach with our concept, instead of going in with a predefined business concept; we let the Market Analysis define the need. Based on the results, the Family Entertainment Centre as one of the project components of the proposed UEC was formed specific to Trivandrum. 4. FINANCIAL INDICATORS •
Net Profit > 2 Crore
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Break Even Point (BEP) <5 years
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Debt Service Coverage Ratio (DSCR) >1.5
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Debt Equity Ratio (DER) – 1:1
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Internal Rate of Return (IRR) > 20%
5. CONCLUSION 5.1 Investment Opportunity •
Long Term Lease of Built up space as an investment opportunity as the property rates at Veli would appreciate manifold in near future which will in turn fetch more return to the investor.
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Commercial Space on long Term Lease for setting up of Night Life Zone with right to sublease and mortgage.
5.2 Role of INKEL INKEL would provide end to end solution from conceptualization to commissioning including obtaining statutory clearance and approvals required for the project, PMC, O&M, etc on a predetermined fixed fee. Also INKEL can implement and operate the entire project on behalf of the investor based on mutually agreeable terms. In this case, investor needs to only bring in the capital. Disclaimer: The findings contained in this Project Profile are based on the initial information collated through primary and secondary research, which is only indicative and may not reflect the realities of an actual project. Reference herein to any specific commercial product, process, service by trade name, trademark, manufacturer, or otherwise, does not constitute or imply its endorsement, recommendation, or favoring by INKEL or any entities thereof.
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