Mall withdrawals in Tier 1 cities have kept the vacancy levels stable: JLL Report
Real estate consultants JLL India has released its latest report ‘Fuelling the Retail Revolution – The Paradigm of Emerging Cities’ in association with the CII National Retail Summit, 2017.
Highlighting the withdrawal of malls across Tier 1 cities, the report identifies 20 cities including tier 2 cities such as Lucknow, Jaipur, Chandigarh, Kochi, Patna, Bhubaneshwar, Indore and Nagpur among the leading cities, as the next retail destinations in the country.
The study bases its findings on key parameters such as total retail stock, upcoming supply, retailer presence, retailer expansion plans and investments. It gives details on various formats of developments that Tier 2 and 3 cities are currently witnessing.
According to the report, the retail sector in Tier 2 and 3 cities has witnessed a much higher investment of USD 6,192 million between 2006 and 2017 as against USD 1,295 million that came to Tier I metro cities during the same period.
Factors like lack of available space in retail malls in metro cities, increasing lease rentals in metro malls, and high land prices in Tier 1 cities have made it difficult for retailers to own real estate in these cities. These factors, the report adds, have become a deterrent for expansion and growth of malls in big cities.
Making a strong case for Tier 2 cities, the report says that factors like international airport connectivity across cities such as Lucknow, Kochi, Bhubaneswar, Nagpur to name a few, rising levels of disposable income have prompted various global and local brands to plan their expansion plans in these cities.
Pankaj Renjhen, Managing Director – Retail, JLL India said, “The retail sector is among the top three employers in the country and its growth will drive the economy of our future cities. Emerging destinations like Lucknow, Jaipur, Chandigarh, Kochi, Indore, Nagpur and Bhubaneshwar are going to be the next big retail hubs. It is for this reason, retailers and private equity firms have started taking an increased interest in Indian retail sector through investments in high-end retail malls in Tier 2 and 3 cities. The report released today presents an overview of this expansion and provides an insight into various trends across the retail development market.”
Chandrajit Banerjee, Director General, CII, “India’s economic potential lies in the growth of smaller cities that have been witnessing transformation on all fronts – urban housing, infrastructure, offices and retail real estate. Being a key component of this development, retail has the ability to drive future growth and add value to the overall infrastructure of these cities. While there is an opportunity in Tier 2 and 3 cities for this sector, a strong focus is required to build the necessary infrastructure to support the growth. Through our National Retail Summit 2017 and the release of an insightful report, we aim to identify the challenges that may impede the growth and leverage the available opportunities.”