Retail-The new driver for commercial real estate

Retail-The new driver for commercial real estate
29/11/2018 , by , in News/Views

The Indian Residential real estate market may be facing a slowdown currently, but that is not the case with the retail sector, as the country sees a significant shift in preference.

The Indian Retail sector is one of the fastest growing industries in the world.  Due to the large scope of business and high growth potential, India is attracting investors across the globe. Many research reports say that the overall outlook for the country retail market continues to be positive. As per CBRE latest report nearly 19 lakh sq ft of fresh retail supply was added during the first half of 2018 across seven key cities, while another 40-50 lakh sq ft of supply is likely to be added in the second half of this year across major cities like Mumbai, Bangalore, NCR, Hyderabad and Chennai. According to the Colliers International Report, India is now the world’s fifth retail destination and expected to exceed $1 trillion by 2020. This has invited retailers, developers, logistic providers and etc to invest in the sector.

The real estate requirements of the retail sector are closely linked to their business model, which has been undergoing a fair degree of disruption and transition across the globe. Developers have understood the functioning of the sector and are contributing in the sector.

Puneet Khullar, Vice-President, Brahma Center Development Pvt Ltd, says: “Various policy reforms by the government, as well as the rising interest of global retailers to debut in the Indian market, are expected to push demand for retail space. Companies are adopting an omnichannel strategy to attract customers where many e-commerce firms are coming up in brick and mortar stores and shopping centres, giving a major fillip to the sector, whereas established retailers are launching their online portals. With the changing aspirations of consumers, we foresee F&B and entertainment segments driving the overall retail space demand. Also, considering the recent developments and investment activities, demand and supply in retail space is set to go up across major cities.”

Developers say with rising income, changes in lifestyle, ease of doing business, NCR has become a hub of Indian Retail Sector. Cities like Bangalore, Mumbai, Pune are also developing as prominent destinations for retail.

“Based on our first-hand experience, there has been a significant increase in enquiries by high-end brands, franchises, and hospitality chains for leasing spaces in some of our projects which are nearing completion. Also, average lease rentals have firmed up by nearly 9% over the last two years, showing a robust demand for commercial spaces in Gurugram. We firmly believe the trend is going to strengthen in the second half of this year. We are expecting this period to be even better, especially with the onset of festive months where most people invest in the market. Existing brands are also prospecting new markets across the country for expansion, which is a positive sign for the growth of the real estate sector,” Raj Singhal, CEO of Elan Group, says.

Looking at the above factors we can say that as far as the retail market in India is concerned it is going only in one direction that’s upward. And this current trend will see more and more people investing in the property market in India.

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