PE investments in retail assets up by 15% in 2017: CBRE

Retail assets in the country witnessed investments of over $0.8 billion from private equity firms and wealth funds in 2017, a 15 per cent increase over 2016, according to CBRE South Asia’s Report. On the supply side, close to 2 million sq ft of new supply entered the market during the second half of 2017 and majority of this was in Kolkata, Delhi National Capital Region (NCR), Chennai, Pune and Bengaluru. While close to 3.4 million sq ft of supply entered the market, 15 new brands established their presence in the country during the year, the report said. It also notes that during the first half of 2018 quality supply is expected to enter the market, led by the southern cities of Hyderabad and Bengaluru. Both domestic and international retailers continue to lead the expansion across fashion and F&B categories. Additionally, the upcoming mall supply, coupled with recent announcements for FDI norms in retail, is expected to boost the entry and expansion of both global and national brands. Going forward, fashion anchors, hypermarkets, family entertainment centers and multiplex operators are expected to lead demand for space, with the average space uptake in terms of area to rise. Despite a strong supply pipeline, demand for quality retail space will continue to exceed the supply in most leading markets, it says. A notable trend witnessed during the year was the adoption of omni-channel strategies by established players. Several e-commerce retailers such as Urban Ladder, Craftsvilla, Myntra, Jaypore, Pepperyfry and Nykaa opened their brick-and-mortar stores; whereas established retailers such as Zara launching their online portals, says the report. During the review period (July – Dec 2017), demand for retail space remained strong, as international brands such as Tom Tailor, Miniso, Simon Carter, and Jo Malone opened their first outlets in the country. At the same time, other well-known brands including Starbucks, H&M, Mango, Westside, Pantaloons, and Hamleys continued to expand operations across the country. Madame Tussauds also made its debut in the country with its first museum opening in Connaught place, Delhi in October 2017. Well-known Swedish home furnishing brand IKEA opened an experience center, Hej Homes, in Hyderabad during the second half of 2017. On the supply side, close to 2 million sq. ft. of new supply entered the market in H2, 2017, a majority of which was concentrated in Kolkata, Delhi National Capital Region (NCR), Chennai, Pune and Bengaluru, says the report. “The government’s continued focus towards making India a preferred investment destination is having a positive impact on the country’s economy as well as the retail landscape. The recent announcement allowing 100% FDI in Single Brand Retail Trading under the automatic route is likely to further ease the entry of global retailers. Competitive rentals, availability of quality space, and with more brands coming in driven by a growing consumer base, the sector can expect significant growth in times to come,” says Anshuman Magazine, Chairman, India & South East Asia, CBRE.