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February 15, 2019

India is expected to see more than 10 million square-feet of additional retail real estate in 2019 – three times that of 2018 – as the sector continues its booming growth across the country.

Investors have poured US$1.6 billion into retail real estate development across India in the past four years – a whopping 1094 percent increase from the four years previous.

“India’s stable regulatory regime, young cosmopolitan population with rising levels of disposable income, and eased retail policy have made it easier for operators to find new catchment areas and open new stores.” says Shubhranshu Pani, MD – Retail Services and Stressed Asset Management Group, JLL India.

Foreign investment norms have been relaxed, allowing foreign investors to own 100 percent of single-brand retail entities, where previously they could only invest up to 49 percent. This has boosted the attraction of the sector, says Pani.

The attraction of development

The expected boom in new retail space is being driven by investor demand for ‘development assets’, including properties under-construction, redevelopment opportunities, or new facilities built from scratch

Investing in development assets makes it easier for investors to overcome the initial challenges of India’s complex real estate approval process, says Pani. “With over 30 different kinds of approvals required to commence a project, it time and cost can often overrun.”

Getting the right mix

As physical retail across the world competes with a booming e-commerce market, developers are having to adapt their strategies to cater to the changing consumer landscape.

‘Consolidation in the retail sector is now prominent,” says Pani. “Successful malls are ones that have and will continue to adapt.”

Increasingly, malls are designed as leisure destinations, set to maximize the consumer’s experience with everything from sophisticated technology to a broad range of dining options and entertainment. Done right, it improves the customer experience, and ultimately footfall.

Among the retail segments faring best is F&B, which is currently valued at US$39.71 billion and expected to grow to US$ 894.98 billion by 2020 according to the India Brand Equity Foundation, a trust established by the Department of Commerce, Ministry of Commerce and Industry, Government of India. Mall developers are also courting restaurant operators as a strong F&B offering is critical to contend with expanding online competition.

Click to read why India’s office supply is set to grow in 2019.

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Shubhranshu Pani

Managing Director, Retail Services and Stressed Asset Management Group, JLL India.

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