The Parliament’s approval of FDI in retail has already set India’s realtors busy who are counting on huge anchor tenants for shopping centres.
For it is only the likes of Wal-Mart that can help raise unaffordable realty prices even more.
According to a report in the Business Standard, several realty majors like Supertech and Rahejas are in discussion with foreign retail players like Ikea, Tesco anf Woolworths to build customised stores according to their front-end, back-end and commercial requirement.
While Noida’s Supertech is showing Swedish furniture market Ikea space in Greater Noida and ‘Sports City’ in Meerut,Raheja Developers, is in talks with Woolworths from Australia and the UK’s Sainsbury’s and Tesco, the report said.
Firstpost had earlier reported that DLF, which holds the largest land bank in NCR, is already planning to kickstart the largest mall in India, with four million sq ft of space in Gurgaon and is hoping that by the time the mall opens in 2015-16, quite a few new retailers and brands would have entered the country by then.
Since the FDI policy opens the portals to major MNC retail brands in India, the organised retail sector will see a major transformation in terms of its overall contribution in the mid-term.
However, “the benefits of the much-awaited FDI decision will not become fully evident in 2013, as it will take mall developers at least two years to incorporate the design elements and dimensions required to meet global standards,” said Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India.
Moreover, no significant quality retail supply is likely to hit the market in 2013.
And while the announcement is a step in the positive direction, it remains to be seen how the various state governments react to it and how many states agree to open their markets to retail FDI.
Also, Indian cities with retail penetration have witnessed a considerable increase in rentals in the last five years. Additionally, the majority of cities are crunched to provide quality and quantity of real estate that global retailers would want.
“A joint venture or joint-development kind of model with developers or land owners can take care of such constraints. To negate the effect of rising rentals, one entry approach that may find flavor with global retailers is scouting for stressed retail assets at an appropriate location,” said KPMG in a study titled “FDI in multi-brand retail and its impact on real estate.”