Comments
The first half of 2016 witnessed the highest annual PE investments in retail with over ₹3,350 crore being invested, compared with only ₹250 crore invested in H1 2015, according to a report by real-estate consultants Cushman & Wakefield.
This is the highest annual PE investments made since 2008.
Owing to factors such as improved leasing activity, relaxed government policies and positive economic outlook, institutional and PE investors are more confident towards investing in retail assets.
Realty opportunitiesMoreover, with the government clearing tax hurdles for Real Estate Investment Trusts (REITs), PE funds are increasingly exploring opportunities in the retail sector as the retail assets can also be listed under a REIT portfolio.
The share of the retail sector assets in cumulative PE investments in India has increased to 18 per cent in H1 2016 compared with 2 per cent recorded in H1 2015.
H1 2016 also saw new mall supply increase to 4.8 million square feet (msf) from a mere 0.2 million msf in H1 2015.
This is the highest half-yearly supply in five years. Delhi-NCR accounted for the highest supply during H1 2016, followed by Pune and Mumbai.
Owing to the completion of Mall of India, one of the largest malls in India, Delhi-NCR accounted for 64 per cent of the share in new supply during the first half of 2016.
However, Delhi-NCR also accounts for the second-highest vacancy rate (20 per cent), owing to over-supply of retail spaces in the market.
Pune witnessed three malls becoming operational, spanning a total of 0.8 msf during H1 2016, while Mumbai witnessed 0.4 msf of mall space coming into supply.
Delhi-NCR and Mumbai remain the largest retail markets, accounting for 35 per cent and 20 per cent, respectively, of the mall stock across the top eight cities in India. Bengaluru is the third largest market, accounting for about 12 per cent of the total stock.
E-commerceAnshul Jain, MD - India, Cushman & Wakefield, said: “In addition to consumer spend, which increased 10 per cent during last 12 months, e-commerce is also contributing majorly to the increased retail spending by Indian consumers. We are expecting to witness some e-commerce companies take up physical spaces in malls to reach out to a wider Indian audience.”
The report said the total new supply of about 13 msf across the top eight cities is scheduled for completion by the end of 2018.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.