The total organized retail real estate supply in India grew by 78 per cent to approximately 4.7 million square feet in 2013 from the total mall supply of 2.5 million square feet in 2012, according to a new report from CBRE.
Pointing out that most of the supply in 2013 was concentrated across Tier II cities, the report, India Retail Market View H2 2013, aid that 2014 was likely to witness supply addition in the key hubs of the National Capital Region (NCR) and Mumbai.
The report said demand from international and domestic brands as well as retailers continued to strengthen throughout 2013; with the second half of the year witnessing an increase in demand for quality retail space in Delhi NCR, Pune and Chennai.
Demand from global retailers in the Delhi NCR and Mumbai markets remained buoyant, as more retail groups sought space in prime shopping centres, as opposed to standalone high street outlets, the report said.
“Despite ongoing uncertainty, retail real estate witnessed good activity during 2013 with a number of international brands entering and expanding across key cities," Mr. Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd., said.
"The year 2014 is expected to remain positive for the retail sector, with existing brands expected to ramp up operations and new brands look to making their India entries. Although domestic retailers have been performing steadily, they face competition from global retail groups, especially in the apparel and F&B segments," he said.
The report said that prominent global players—such as Starbucks, Krispy Kreme, Dunkin Donuts, Forever 21, Zara and Superdry—expanded their presence across the country’s leading cities.
Retailers in the luxury and bridge-to-luxury segments were particularly active, with brands such as Brook Brothers, Missoni, Michael Kors and Emilo Pucci making inroads into the country’s market places, it said.
According to the report, rental values displayed mixed trends across the top cities during H2 2013. While traditional high street markets—such as Khan Market (Delhi) and Brigade Road, Commercial Street (Bangalore) witnessed an increase in rental values, the shopping hubs of Eastern Mumbai and South Bangalore observed a rental decline in H2 2013 compared to first half of the year.
Cities such as Hyderabad, Chennai and Kolkata largely witnessed stability in pricing across most micro-markets; while Pune saw an increase across its high streets, even as its mall rentals remained stable.
"Going forward, the limited availability of quality retail space in core locations is likely to pose a greater barrier to new retailer entry in a number of key markets—including Delhi NCR, Mumbai and Bangalore—as opposed to prohibitive rentals. On account of such constraints in quality supply, select developments are likely to witness greater than average increment in rentals because of retailer preferences for such spaces," the report added.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is one of the world’s largest commercial real estate services and investment firms.
See News Videos