The retail segment in the real estate sector attracted an investment of over 700 million last year and inflow from private equity firms and wealth funds could rise by up to 20 per cent in 2017, according to property consultant CBRE. “The retail segment in 2016 witnessed more than USD 0.7 billion of investment by PE firms and wealth funds and saw the entry of 19 new global brands into the country,” CBRE said in a report.
“Private equity investments into the segment are expected to increase by as much as 20 per cent in 2017, signalling that the overall market dynamics for the segment continues to be positive.”
In its latest India Retail MarketView report that tracks the country’s seven major cities, the consultant said supply of retail space fell by 5 per cent to 3.4 million sq ft last year from 3.6 million sq ft of organised supply in 2015. These seven cities are NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad and Pune.
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According to CBRE, a majority of the supply that entered the market in 2016 was concentrated in the National Capital Region (NCR), Bengaluru and Mumbai.
Global retailers expanded their portfolio with multiple store openings. International apparel and domestic F&B players dominated demand.
“Rental trends varied across key high streets and malls during the year. While some micro-markets witnessed stable rentals, others saw varying levels of rental increments. The upward movement of rentals in these select micro-markets was due to constrained availability of retail space amid a scenario of robust demand,” CBRE said.
Measures such as relaxation of FDI norms in single-brand retail, e-commerce, and food products manufactured and produced in India coupled with the expected easing in retail loan rates are likely to positively impact retailer entry into India and demand for consumer durables, respectively.
“In 2016, the Indian economy saw quite a few legislations and policies being cleared which will have a positive impact on the retail real estate segment in the long run,” said Anshuman Magazine, Chairman–India and South East Asia, CBRE.
The increased transparency as a result of these policies will lead to increased consumer and investor confidence, he added.
“Another interesting trend that emerged last year was the increased interest of private equity players in retail malls. Several investment deals were reported during the year both in tier I and tier II cities by established players, which is indicative of this positive sentiment,” Magazine said.
According to Vivek Kaul, Head, Retail Services–India for CBRE South Asia, the country’s retail real estate market is maturing at a steady pace.
“Key cities and retail developments continue to be on the radar of international developers. Institutional investments in the retail real estate sector are expected touch a new high in 2017,” Kaul said.