Market Summary Kolkata continued to attract interest from retailers in the first half of the year. The high street segment led transaction activity in the city, followed by activity in organized retail. Apparel and F&B players dominated leasing activity.
The review period marked the foray of leading international brands in the Kolkata market - Starbucks entered East India with its first outlet in Kolkata at Park Street, while GAP and Sephora made their market entry through South City Mall. However, the city did not witness any new space addition during the review period. Rental Trends Rental values remained stable in both organised and high street retail segments. Outlook
Quality supply infusion is expected in the second half of 2018 across most major cities such as NCR, Mumbai, Bangalore, Chennai and Hyderabad. Close to around 4 – 5 million sq. ft. of new supply is expected to come onstream in H2 2018. With retailers expanding across Metro and key tier I cities, demand is likely to continue to outstrip supply in most major cities.
International fashion brands such as H&M, Marks and Spencer are expected to expand across metro cities as well as enter new tier I and tier II cities. Prominent retail developer, Phoenix Mills Ltd recently acquired underconstruction retail assets in Indore and Lucknow. With REIT’S in the offing, the focus on developing investment grade developments is likely to redefine the retail segment in these tier II cities.
Retail categories such as Fashion, Departmental Stores, Sports & Leisure, and Food & Beverages will continue to dominate the leasing activity in H2 2018. F&B segment is likely to emerge as a healthy mix of operators. In addition, multiplex operators are anticipated to broaden their presence across major markets in quality developments across tier I and tier II cities.
Rental values are expected to witness varying trends across high street locations and mall clusters throughout India. Although adequate supply is lined up in all major cities in H2 2018, the rental trajectory is dependent on timely delivery of these investment grade developments. Rental growth at most high street locations in metro cities is at its peak, so it is expected to remain stable at these locations.
The retail segment in
India is undergoing a rapid transformation and retailers are increasingly adapting to a variety of store formats to address the needs of different markets and locations. We anticipate that this trend will continue, and retailers will experiment with more creative formats. Digital and virtual stores are already making their way in cities such as Bangalore, with such technologies expected to get even more sophisticated in 2018. Although brick-andmortar stores will continue to flourish, retailers who realign as per customer expectations and explore the most relevant store formats for their brands will survive and thrive.