Business & Economy

83 % drop in prime retail space supply in 2012 in India: CBRE report

NetIndian News Network

Mumbai, February 16, 2013

There was an 83 per cent drop in supply of organised retail space across key cities in India in 2012 but they continued to witness an increase in transaction activity and retailer expansion, according to CBRE's latest report, “Indian Retail Market View H2, 2012”.

The report said approximately 2.5 million sq.ft. of fresh retail space entered the market in 2012, mainly concentrated in Bangalore, Kolkata and Pune,  as against over 15 million sq.ft. in 2011. 
Though this is a significant drop in prime retail supply, the market witnessed leading brands and retailers pursuing expansion plans aggressively and increasing their presence in the Tier I as well as Tier II and III cities of the country, it said.
Developers remained focused on attracting tenants in completed properties and reducing existing vacancy levels, rather than focusing on launching new projects. Most of the supply pipeline is scheduled for completion in 2013; by when the existing vacancy levels might reduce, it said.
“Despite the large dip in prime retail space supply across key cities last year, the good news is that retailers continued with their expansion plans. This positive sentiment is indicative of retailers taking a long term view of the Indian economy despite the short term struggle. The Government’s bold and welcome move of allowing FDI in retail has further contributed to this positive sentiment," Mr. Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd said.
In all the seven cities presented in the review, the retail real estate market appears to be promising with an increase in retailer enquiries, the report said.
"High street formats continued to dominate the retail landscape, while most luxury retailers preferred to operate from five star hotels and premium malls. New markets are also coming under consideration as international retailers expand their focus beyond the top three cities to include the likes of Hyderabad, Chennai, Kolkata, Pune and Chandigarh," it said.
Major cities continued to witness steady expansion by international apparel and F&B retailers. Several well-established international mass market brands have also entered tier II locations, partly due to the lack of space options in tier I markets, it said.
According to the report, domestic retailers are expanding steadily in tier I locations but fierce competition with international brands for prime space in core locations is pushing some to tier II cities. 
"Fashion remains the high growth sector, and leading apparel brands from the US and Europe continue to try and enter or expand in major markets across the country, including some tier II locations. 
"International food and beverage (F&B) outlets are also expanding, both at the fast food and fine dining end of the market. Luxury retailers are entirely focused on tier I locations but continue to refine their strategy and product offering for India, which in selected cases has seen them consolidate and reduce the size of some stores. Among domestic retailers, home furnishers and supermarkets are expanding in metro cities," the report added.
CBRE Group, Inc., a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm. It was the first independent international real estate consultancy to set up offices in the Indian sub-continent with an office in New Delhi in 1994.