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India can witness a Shortfall in Retail Real-Estate Space by 2012'
Source: Indian Realty News May 10, 2010
The country could see a shortfall in retail real estate space in 2011-12 though 40 million sq. ft. is expected to come up between 2010 and 2012. Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj, said 25 per cent of the stock was likely to get absorbed in 2010. In 2009, about nine million sq ft was consumed by the segment, he said.

On the impact of the slowdown and recovery, speakers said consumers had always been with them though the discretionary spends on non-food items had dropped due to insecurity post-Lehman fall. The demand in the North and East of the country continued to be robust even then, and the impact was seen in IT-dominated areas such as the South. Pune was among the weakest on spends during the downturn.

B S Nagesh, vice-chairman, Shoppers Stop, said retailers in general tripped on their own shoelaces. One can grow at a certain rate beyond which debt and liquidity mattered, said Nagesh. The general agreement was that greater cooperation between shopping centre developers and tenant retailers in design and management of shopping malls was needed.

However the bottomline was that stores should make money for sustenance. There was consensus that the challenges facing the shopping centre industry such as mall design, revenue-share versus minimum guarantee rental agreements and tenant mix could be overcome by developers and retailers working in unison.

Some panellists pointed to the imperative to make inefficient spaces (where access was an issue) efficient to facilitate better returns per square foot. However successful a mall was, there were pockets of space which did not yield the requisite revenue per square foot and impacted the overall operational income, they said.

There was a strong opinion that despite mall spaces classified as retail in real estate, their dynamics in terms of shopping space were dependent on revenue generation and hence returns should not be seen as that on real estate. The key to a mall’s success was how it could be kept relevant in terms of consumer needs, aspirations and futuristic requirements, besides fulfilling other parameters such as design, content, right tenant mix and efficient mall management.
Tag: Real Estate India, Retail Properties, Commercial Spaces
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