Real estate industry has been providing scrupulous solution for commercial property solution over the decades. Now the commercial real estate market is hooking on the retail portfolio to attract more and more domestic and international revenues. The future prospect of retail real estate in India attracts the Private Equity (PE) investment flow to this very sector. Observing a limited supply chain all over the country, global PE firms started investing in retail sector with a view to branch out their investment selection in the country.
The reason behind investor sentiment is flowing towards retail real estate in India is stable economy of the country which is relatively less sensitive to the global slowdown. Nevertheless, the growth in the retail real estate sector won’t take place abruptly. It will be rolling slower than anticipated. Retail real estate boom will put India on the global map, as many FMCG, E-Commerce, Manufacturing companies and large Logistic providers are going to expand their business opportunities in India. The retail sector in India is emerging as one of the prominent employment sector with growing middle-income group populace and rapid urbanization of the peripheral areas of metropolitan cities. Indian retail market is expected to grow at a Compound Annual Growth Rate (CAGR) of 10% to US$ 1.6 trillion by 2026.
The combination of retail and real estate will be highly-productive for both of the sectors. Retail real estate is considerably a complex subject other than the two major investment segments of real estate i.e. – residential and commercial sectors. A retail investor needs to assess many factors before investment such as- stipulation of the retail space, return on investment, commercial trends, performance of t competitive companies, consumer spending and laws governing retail leases. We can see half of the expensive retail micro-markets are Delhi-based. Malls and other expensive market places earns their revenues largely from rents comes from the retail industry.
Online presence of a company is crucial for business gains for any industry. Both the retail and real estate sector boast strong web identity and offerings. Retail industry owns the popular choice category as India’s Business to Business (B2B) E-commerce market is a mass-scale hit. The retail market of India has two major divisions ‘Organized Retail Market’ which is valued only 9% of the entire sector and ‘Unorganized Retail Market’ encompasses the remaining 91% of the sector. With the steady development of E-Commerce Industry in India, there are several start-up and large-scale companies are opening business hubs in tier II and tier III cities across the country. However, India’s retail real estate sector developing faster with changing consumer behaviour and better investment resources.
“The decision of leasing of a retail space is driven by the potential purchase capacity of the location. On the other hand a retailer determines a real estate investor’s return on investment. To earn long term stable return from real estate sector investors are putting their money on malls and other mixed-used retail projects managed by either a competent agency or by the development house,”- asserted Mr. Mahesh Somani, Head- East Zone, National Association of Realtors India (NAR).
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