Considering the growing surge in e-commerce business in the country, its quite natural to conclude that it would slacken the business in the physical malls segment. But according to ANAROCK’s latest retail report TCCx: Redefining the Future of Retail Malls released at the CII North Retail Conclave recently in Delhi, the sector is riding high on the phenomenal rise of consumerism and renewed interest by institutional investors.
According to the report, the Indian mall developers are looking to add over 65 mn 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% (18.2 mn sq. ft.) will come up in Tier 2 & 3 cities. MMR, Delhi-NCR, Hyderabad and Bengaluru together lead with new supply aggregating to nearly 34 mn sq. ft. in these cities.
Anuj Kejriwal, MD & CEO – ANAROCK Retail says, “Of the 65 mn sq. ft. of new mall supply hitting the Indian market by 2022-end, nearly two-thirds (40 mn 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 bn into Indian retail between 2015 and Q1 2019. In fact, over 60% 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 USD 115 million in just the first quarter of 2019.”
Other Report Highlights
- Region-wise, new mall supply in West India tops out with 25 mn sq. ft., followed by South India – 21.7 mn sq. ft., North India – 11.9 mn sq. ft.& East India – 6.4 mn sq. ft.
- Besides metros, prominent Tier 2 & 3 citiesfor 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.
- The retail sector will witness new trends and methods of fund-raising, including increased platform-level dealsand Retail REITs