Real estate sizzles with deals by global retailers, investors

International retailers and investors are back in the reckoning by swinging deals in prime real-estate destinations.

Swedish furniture-maker IKEA and Spanish textile giant Zara are among those looking to acquire prime retail space in Mumbai for expansions.

While IKEA is understood to be in talks with Oberoi Realty to buy a retail space for over ₹900 crore in Oberoi Realty’s upcoming project in Borivali, Zara is likely to take 50,000 sqft carpet area in Mumbai high street Flora Fountain.

Market watchers point that this is the largest high-street retail space take up by an international brand in India.

Last month, Tata Group company Rallis India had also signed an agreement with IKEA India for assigning its leasehold rights for 26 acres of land at MIDC Industrial Area in Navi Mumbai’s Turbhe locality for ₹214 crore.

Others such as Blackstone too have their sight on retail segment. The company reportedly closed a deal to acquire two retail assets of Gurgaon-based developer Alpha G: Corp.

The malls housed under AlphaOne brand are located in Amritsar and Ahmedabad and spread over 550,000 sqft dedicated for retail and entertainment segments.

Singapore government-owned sovereign fund GIC bought 50-per cent stake in Viviana Mall in Thane, on the outskirts of Mumbai, for over ₹1,000 crore, last month.

Viviana has a gross leasable area of one million sqft and one of the biggest malls in the country. It has brands such as Shoppers Stop, Forever 21, Zara, and Marks & Spencer.

Pankaj Kapur, MD, Liases Foras, a real-estate data firm notes, “Retail industry depends upon the macro economy. The economy is looking up and many brands are coming to India. Both from retailers’ and investors’ perspective, there is value-stock available in the market. Rentals too are much affordable and it is the right time to expand in the country.”

According to a report by JLL, the FDI inflow in retail trading has increased between October 2014 and September 2015, to $70.75 million. Additionally, with the steady rise in shoppers’ desire to consume foreign brands due to increased brand awareness, the scenario looks even more inviting.

In 2015, PE investment in retail properties alone was $39 million, and in 2016, it is expected to be in the range of $75-80 million.

Susil Dungarwal, Founder, Beyond Squarefeet, a retail consultancy firm, however notes that retailers are picking up much less than they actually ought to. “Retailers and investors are still cautious. Globally, retail space yields the high return on investment compared to any other realty assets. In India, even though there is an oversupply in retail space, there is not much quality retail space available. However, they still see value enhancement in the property in the current time.”

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