The Hindu Business Line : Mall construction set to boom, says Merrill Lynch study

A report on real estate trends by Merrill Lynch said that the number of malls in these cities was expected to grow to about 250 by 2010 as against 40 now. In terms of total area, there was 12.40 million square feet (mnsqft) of mall space available in these cities, the report said quoting a survey by Knight Frank India.

By 2007, the mall space availability was estimated to increase to 55.70 mnsqft.

In the commercial space, business opportunity was led by the unprecedented outsourcing activity in the country, the report said. As the trend gathers pace commercial space requirement would expand to 75 mnsqft by 2008 from the present 8.5 mnsqft entirely driven by information technology or IT-enabled services.

The boom in mall construction is driven by organised retail industry, the report said. About 200 mallswere already under construction in various parts of the country with a combined retail space of 25 mnsqft. The report said that the strong potential for the retail industry has prompted entrepreneurs to make big investments in malls. Expectations, the report said, is that penetration levels of retail trade through the malls would increase in big metros and eventually filter down to the smaller towns.

Foreign direct investment in the retail sector would help accelerate the growth of the organised retail trade. Currently, cash and carry wholesale trades were the only options for foreign retailers in India. The report said that with the planned opening up of the retail trade sector, the full potential in the sector would be realised.

The entry of FDI would ease the financial pressures in the sector and help bring in technical know-how and best-management practices.Such consolidation, the report added, would help bypass the existing intermediary system, invest in supply chain and ensure lower prices to the end customers as well as higher returns to farmers and original producers. This in turnwould result in increasing urbanisation, increased supply of malls and changing demographics.

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