New Delhi, January
24, 2017: CBRE South
Asia Pvt. Ltd, India’s leading Real Estate Consulting firm, today announced the
findings of its latest India Retail MarketView – H2, 2016 report. According to the report, the retail
segment in 2016 witnessed more than USD 0.7 billion of investment by PE
Firms/wealth funds and saw the entry of more 19 new global brands into the
country. Private equity investments into the segment are expected to increase by as much as 20% in 2017, signaling that the overall market
dynamics for the segment continue to be positive. During the second half of
2016, the seven key cities across the country witnessed the addition of almost 2 mn sq.ft. of supply, bringing
the annual supply to 3.4 mn. Sq.ft, a marginal decline from
the 3.6 mn sq.ft. of organized
supply in 2015 (5% y-o-y dip).
Key Highlights of 2016
More than 180 entries / expansions by prominent global brands in 2016
PE investments spread across Mumbai, NCR, Pune and Ahmedabad
FDI norms eased - 100% automatic FDI in single brand retail, 100% FDI in online retail under the marketplace model
to CBRE, in 2016, majority of the supply that entered the market was concentrated
in the National Capital Region (NCR), Bangalore and Mumbai. Global retailers expanded their portfolio with
multiple store-openings; international apparel and domestic F&B players
trends varied across key high streets and malls during the year. While some
micro-markets witnessed stable rentals, other saw varying levels of rental
increments. The upward movement of rentals in these select micro-markets was
due to constrained availability of retail space, amidst a scenario of robust demand.
year 2016 was of significant importance for the real estate (RE) sector, as
comprehensive measures from a legislative standpoint were introduced with a
view to improve transparency and accountability; thereby spurring investment
and end-user activity in the sector. Measures such as the relaxation of FDI norms
in single-brand retail, e-commerce, and food products manufactured/produced in
India; coupled with the expected easing in retail loan rates are likely to
positively impact retailer entry into India and demand for consumer durables
on the findings of the report, Anshuman Magazine, Chairman,
India & South East Asia, CBRE said,
“In the year 2016, the Indian economy saw
quite a few legislations and policies being cleared which will have a positive
impact on the retail real estate segment in the long run. The increased transparency as a
result of these policies will lead to increased consumer and investor
confidence. Another interesting trend that emerged last year was the increased
interest of private equity players in retail malls. Several investment deals
were reported during the year both in Tier I and Tier II cities by established
players which is indicative of this positive sentiment.
Vivek Kaul, Head,
Retail Services, India for CBRE South Asia Pvt. Ltd. said, “India’s retail real estate market is maturing at a steady pace. Key
cities and retail developments continue to be on the radar of international
developers. Institutional investments in the retail real-estate sector are
expected to touch a new high in 2017.
H2, 2016 – city
NCR continued to be on the radar of domestic and international with fashion retailers and F&B operators being key demand drivers
More than 0.8 million sq. ft. of grade A retail space entered the market in H2, 2016
Khan Market remained a prime location with F&B operators/retailers
Strong demand for retail space was observed across high-streets as well as prominent mall developments
Leasing activity was driven by domestic F&B operators and foreign retailers across various segments.
Bangalore observed steady retail leasing activity across both high streets and shopping centers,
Approximately 0.38 million sq. ft. of fresh retail supply entered the city in H2, 2016
Retail leasing activity in Hyderabad witnessed an upward momentum during the second half of 2016 driven by the apparel, entertainment, electronics and the F&B sector
Approximately 0.2 million sq. ft. of fresh supply entered the market in H2, 2016
The city witnessed brand entries by global retailers such as Aeropostale and domestic brewery chain Prost Micro Brewery
High-street locations also witnessed expansion by apparel brands
Strong demand for Grade A retail space was observed across prominent mall clusters and emerging high-street locations of the city
Due to the paucity of quality organized space in the city, bulk of the leasing activity during H2 2016 was concentrated in the Phoenix Market City Mall
Across high-street locations, most of the store openings were observed across Viman Nagar and Baner while traditional high-street locations of JM Road and FC Road witnessed limited transaction activity
During H2 2016, Kolkata witnessed buoyant retail leasing activity with majority of the leasing being dominated by organized developments.
Demand from the apparel and fashion segment dominated transaction activity during the review period followed by furniture brands
The city is expected to witness fresh supply addition in coming year which is anticipated to spur retail activity
we move into 2017, Delhi-NCR and Mumbai will continue to be the preferred
points of entry for global retailers as both cities have the presence of the
right target catchment as well as suitable real estate opportunities. While
there is a strong supply pipeline expected in 2017, demand for organized retail
space will continue to exceed the supply in most top markets. This will put an
upward pressure on rentals at major high streets and investment-grade malls.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.