Wednesday, 5 August 2015

Retail real estate activity to stay focused on ‘big three’ cities

Retailers in India have been advised to focus on rationalising existing store networks, improve operational efficiency and formulate long-term real estate strategies.

“Leasing activity in India, is expected to remain focused on the ‘big three’ cities of New Delhi, Mumbai and Bengaluru, with very few retailers looking to expand elsewhere,” said Vivek Kaul, Head - Retail Services, CBRE South Asia.

Attractive market in India continues to be seen as an attractive emerging market by global retailers. Activity from new entrants in the India market, in fact, is expected to pick up in 2015, reveals a study, CBRE’s Retail Space Trend in First Half of 2015. It said global retailers from the US and the EU continued to lodge enquiries and plan market entry or expansion for this year.

Many retailer groups, however, have been encountering impediments for want of quality retail space. An emerging trend has also seen a number of overseas brands setting up online stores to service consumers in India. Domestic expansion, Domestic retailers, meanwhile, have been expanding steadily, especially in tier II and III cities, as they look to compete with international retailers entering the market.

With the growth of online retail, however, large department stores have been struggling to stay profitable - many reducing space requirements as a strategy. Kaul said, “Many shopping centres have been filling vacant spaces with more F&B and experiential elements. New retail strategies have also been noted in the electronics space, where retailers have been expanding across tier-I cities, while opting to service tier-II markets through online platforms.”

As for the pipeline for new shopping centre space remains strong in India, primarily in tier-II cities. The upcoming project line-up for the year includes several shopping centre projects that were deferred from 2014. Asia Pacific “The Asia Pacific region is expected to continue to see retailers enter the geography - along with demand for new space - as landlords look to introduce new brands to attract shoppers,” Kaul said.

The region remains attractive for global retailers looking to move away from their home markets due to factors such as the region’s expanding middle class, demographics and urbanisation. “The retail sector looks positive for tenants as landlords are more open to negotiate lower rates - tenants now have more bargaining power, but this is also translating to less urgency about signing contracts for new space and longer lease negotiations,” Kaul said.

No comments:

Post a Comment