Thursday, September 22, 2011: 01:34:33 PM

Retail Trend

Retailers on a real estate buying spree in Chennai

Large retailers looking to cash in on growing market, Chennai providing massive opportunities in retail

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Real estate sector in India has witnessed a steady growth over the last few months, owing to large scale investment in infrastructure. Even though the strict RBI credit policies have put pressure on the housing sector, retail giants like Reliance, Pantaloon, Aditya Birla (More), Trent (Tata) and Shoppers Stop are looking to cash in on the growing market demand.

 
Chennai, one of burgeoning metros of India, is a lucrative option from the infrastructural point of view. Latest reports suggest that 20 more sprawling malls are going to be set up in and around Chennai over the next few years. With the demand of lifestyle products going up substantially over the years, retail giants have shown increasing interest in setting up malls.
 
The Global Wealth Report 2010 published by Credit Suisse shows that currently India has a total of 1,70,000 high net-worth individuals (HNIs). The total disposable incomes of these individuals are quite high and are expected to go even further up at the rate of 8.5%.
 
The city of Chennai currently has only three malls which measures upto 8 lakh sq feet of retail space. Compared to other bigger cities like Mumbai (45 malls), Delhi (42 malls), Bengaluru and Pune (8 malls each), the number is quite low. However, brands like Apple and McDonalds are eagerly waiting to invest in the real estate sector in Chennai in order to get a hold over the ever increasing demand of lifestyle products.
 
Retail sector buying big
 
According to experts, the ever elusive conservative image of the city has been one of the main reasons behind investors not being attracted to investing in retail real estate in Chennai. But recently that is being replaced by images of affluent youngsters working in the new economy who are not afraid of spending and cashing in on the rapidly growing retail sector. Hence, investors are looking for empty spaces ranging between 1,000 sq ft and 150,000 sq ft in various formats across the city and its outskirts.
 
KS Sudarshan, COO of Ozonegroup, says that “Currently 85-90% of malls are occupied and there is no oversupply. Newer malls are expected to come up and very soon investments will go up even further.”  
 
Even Prof Ramaswamy Iyanger, faculty - Retail at Welingker Institute of Management Development and Research, Mumbai, echoes the same sentiment. According to him, “Chennai is being seen as the next biggest destination for retailers. While new retail malls are in the process of being set up, even smaller retailers will try to cash in on the opportunity.” He further says, “Right now, the existing market is quite saturated. But as retailers prepare to target the market, new ventures will surely be set up.”
 
A study shows that The Spencer Plaza, which started over an area of 3,00,000 sq ft, has now become the mega mall of the city covering 1.05 million sq ft. The pricing has also gone up from Rs 18-22 per sq ft per month in 1991 to the current Rs 60-100 per sq ft per month.
 
However, multiple investments are what the government is aiming at. With several brands trying to gain footholds, investments are not expected to be sluggish as yet. 
 

Sambuddha Sengupta


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