Chennai: India’s retail real estate sector is witnessing growing investments by leading private equity funds and institutional investors against the backdrop of policy changes, growing consumer demand, stable economic and political environment, and quality retail real estate development, said a report.
Released by CBRE South Asia, the report states recent policy changes including relaxation in Foreign Direct Investment (FDI) norms have resulted in an investor-friendly business environment as well as the economy’s sturdy market fundamentals has prompted rise in institutional investors’ interest in Indian retail real estate.
Some of the key investors in the retail segment include Blackstone Group, Canada Pension Plan Investment Board (CPPIB), Singapore sovereign wealth fund GIC and The Xander Group. Private equity major Warburg Pincus is also poised to enter into an alliance with developer Runwal Group to invest $1 billion in retail-led mixed-use development in India.
The report also highlighted the limited availability of space in operational well-performing malls coupled with an upward pressure on real estate costs in these centers, as a concern for brands looking to enter the Indian market.
Rising consumer base and increasing spending potential and patterns even in tier II and tier III cities have generated an opportunity for many retailers, who are now progressing aggressively into tier II and III cities. With a large number of cities / towns available for growth, brands entering India have a lot more avenues to open doors and reach out to customers, the report added.
“There is immense potential for growth in the retail segment that has been aided by the recent relaxation in investment norms by the government. With a population base of over one billion, the Indian market provides a wide customer base which is poised to be the third largest consumer market by 2025,” said chairman, India and South East Asia, CBRE, Anshuman Magazine.
According to him, this provides a significant rationale for developers to invest in shopping centers, thereby providing retailers with quality real estate to set shops in, which in turn can change the retail dynamics of India.