India’s retail sector is riding high on the rise of consumerism
The photo has been used for illustrative purposes.
Indian real estate sector is looking at 65 million sqft mall supply by 2022. Despite the onslaught of the e-commerce business across the country, malls are still serious business in India. According to ANAROCK’s latest report, retail sector is riding high on the phenomenal rise of consumerism and renewed interest by institutional investors.
Indian mall developers are looking to add over 65 million sq. ft. of new mall supply by 2022-end across the country.
Of this total new supply, the top 7 cities comprise 72% share and the remaining 28 per cent (18.2 million sq. ft.) will come up in Tier 2 & 3 cities. MMR, Delhi-NCR, Hyderabad and Bengaluru together lead with the new supply aggregating to nearly 34 million sq. ft. in these cities
Region-wise, new mall supply in West India tops out with 25 million sq. ft., followed by South India - 21.7 million sq. ft., North India - 11.9 million sq. ft. & East India - 6.4 million sq. ft.
Besides metros, prominent Tier 2 & 3 cities for retail growth include Ahmedabad, Amritsar, Baroda, Bhubaneshwar, Chandigarh, Cuttack, Dehradun, Goa, Guwahati, Indore, Kochi, Lucknow, Nagpur, Mysore, Surat, Rourkela, and Trivandrum.
The Indian retail industry has moved from long-term leasing to short-term leasing tenures (3-5 years) to enable constant updating of the brand mix within the mall. Globally, the standard lease term is still above 5 years.
“Of the 65 million sq. ft. of new mall supply hitting the Indian market by 2022-end, nearly two-thirds (40 million sq. ft.) will deploy by 2020-end itself — and not just in the metros. This new supply is also driven by the increasing interest of institutional investors — including PE players — who invested almost USD 1.9 billion into Indian retail between 2015 and Q1, 2019.
In fact, over 60 per cent of this investment corpus was infused in the last two years (2017 and 2018) alone, making these the best years for the retail sector in recent times. Notwithstanding the decline in deal activity in the second half of 2018 following the NBFC-induced liquidity crisis, the retail segment attracted investments of almost $115 million in just the first quarter of 2019,” according to Anuj Kejriwal, MD & CEO - ANAROCK Retail.
The report also maintains that REITs can be a viable tool for mall developers to raise funds, but this fund-raising instrument still needs to mature sufficiently. Also, the retail REIT structure and performance may not be directly comparable with the commercial office sector.
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