As many as 24 new global brands have forayed in the last two years across Mumbai, Delhi NCR, Bengaluru, Hyderabad and Chennai. This is leading to a resurgence of retail real estate, as per industry leaders at Shopping Centres Next 2023
Bengaluru: The Indian retail real estate sector is experiencing a robust resurgence, largely attributed to the entry of global brands into the Indian market. Over the past two years, a total of 24 new global brands have entered the Indian market, establishing their presence in cities such as Mumbai, Delhi NCR, Bengaluru, Hyderabad, and Chennai.
The operational retail stock as of first half of the year (H1) 2023 stands at 89 million sq. ft. in Delhi NCR, Mumbai, Pune, Bengaluru, Kolkata, Chennai and Hyderabad together. Mall retailers in India’s tier 1 and tier 2 cities (urban and suburban areas included) have flourished in the last two years, defying post-Covid speculations.
With Gen Z, young workforce, better purchasing power and growing GDP, it is a better time for investors to consider putting funds into building shopping centres and reaping benefits with value, said leaders at industry leaders at Shopping Centres Next 2023.
The Shopping Centres Next 2023 event, hosted in Bengaluru, opened its doors to industry leaders, experts, and enthusiasts on 3 October 2023, to share valuable insights into the shopping centres sector for investors. The first day of the event brought forth a wealth of insights into the evolving landscape of shopping malls in India, highlighting their transformative role as hubs of community, technology, and growth.
As demonstrated in the discussions on day 1 at the event’s masterclass for shopping professionals, India has emerged as a coveted destination for global brands. Increased consumption, growing institutional participation, strategic collaborations with Indian retail chains, and a supportive regulatory environment have all contributed to India’s allure.
Despite the growth in mobile and online commerce, physical stores continue to hold the ground in terms of offering experiential shopping and fostering social connections. Shopping centres are evolving into community centres where people gather not only for shopping but also for entertainment, relaxation, and socializing.
“When you sell an asset, you realise the value instantly. For the retail space players such as hotels, hospitals and upcoming annuity businesses like data centres or warehousing, there are twin benefits. One is the capital which can double, triple, etc. depending on the land prices in the location and various socio economic factors. The second benefit is annuity income. The moment one builds a good shopping centre, runs it well and ensures consumption, retailers can do fabulous business and make money from their turnover rent. Today, hardly 100 malls in India have been able to achieve this. There is enough potential for this.” said Rajendra Kalkar, president – malls at Phoenix Mills Ltd., during a masterclass
Citing the purchasing power and volume of purchasers in the country, he projected that with India beating China in GDP growth last year, this trend is set to grow at least for the next 10-15 years. “Also, the earning age of customers itself is a key factor to consider investing in shopping centres in India and reaping benefits from it,” he added.
Further elaborating on the need to make sure that the shopping centre becomes a part of the community and vice versa, it is important that investors plan to integrate social connections at the starting stage of mall design planning itself. “For Gen Z, shopping centres are where community building begins; that is the heart of their needs to meet, dine, socialise, refresh and spend time. There are ample ways to build on these needs such as organising health awareness programmes, wellness and fitness programmes, art projects, etc” added Kalkar.
“There is enough consumption demand in tier 2 and 3 cities, especially where we are present. Our mall in Bhubaneswar is among the best and as good as the other malls in the other metros,” said Jayen Naik, chief operating officer, Nexus Malls.
He added that the median age of the population was 28-30 years. Which means, more than half the population will be consumers tomorrow.
“Given the rising economy, large skilled population and disposable income growth, consumption is bound to grow. Good real estate can be built with the right amount of research and planning and we hope a lot more interesting spaces come up across all state capitals, smart cities and places regardless of tiers,” he added.
