‘PE In­vest­ment in Re­tail Realty May Dou­ble’

Eco­nomic sta­bil­ity, lib­er­al­i­sa­tion in FDI pol­icy likely to make mar­ket at­trac­tive for global brands

The Economic Times - - Companies -

Kailash Babar & So­bia Khan

Mum­bai | Bengaluru: The re­tail sec­tor can look for­ward to a more cheerful 2016, given some of the good ini­tia­tives taken by the gov­ern­ment. Pri­vate equity in­vest­ment in re­tail real es­tate is ex­pected to dou­ble this year to nearly $80 mil­lion, showed a JLL In­dia study. In 2015, re­tail was one of the sec­tors that opened up to 100% for­eign di­rect in­vest­ment (FDI), which is ex­pected to im­prove for­eign fund in­flows.

Eco­nomic sta­bil­ity, FDI pol­icy lib­er­al­i­sa­tion, in­clud­ing open­ing up of sin­gle-brand re­tail and im­prove­ment in the con­sumer sen­ti­ment, is ex­pected to help global brands wit­ness a con­ducive en­vi­ron­ment for in­vest­ment in In­dian re­tail and re­tail realty sec­tor.

“There’s a steady rise in shop­pers’ de­sire to con­sume for­eign brands due to in­creased brand aware­ness, and the sce­nario looks even more invit­ing. As more global brands re­alise this, they are ex­pected to en­ter In­dia in 2016. This will make devel­op­ment of world­class malls, hav­ing su­perla­tive de­signs and am­bi­ence, the need of the hour,” said Anuj Puri, chair­man & coun­try head, JLL In­dia.

“The need of the hour is to have qual­ity re­tail spa­ces within large pock­ets of res­i­den­tial and com­mer­cial devel­op­ment. Hav­ing multi-use res­i­den­tial-com­mer­cial prop­er­ties with re­tail at­tached will serve the lo­cal con­sump­tion and will al­low an or­ganic growth across sim­i­lar fa­cil­i­ties,” said Rubi Arya, ex­ec­u­tive vice-chair­man, Mile­stone Cap­i­tal Ad­vi­sors.

Ac­cord­ing to Arya, cur­rent an­nual yields from re­tail spa­ces are any­thing be­tween 9% and 10%, which are healthy and with the in­creased de­mand for space from brands, yi- elds can move up sub­stan­tially.

Select realty de­vel­op­ers are find­ing it at­trac­tive to in­crease their fo­cus on re­tail realty seg­ment and they are also be­ing sup­ported fi­nan­cially by global in­vestors.

Bengaluru-based Nitesh Es­tates has a five-year plat­form deal with Gold­man Sachs to in­vest .₹ 1,600 crore in malls with size of 3.50 lakh sq ft to 4.50 lakh sq ft each. Each in­vest­ment will be .₹ 250 crore to .₹ 350 crore but can go up to .₹ 500 crore de­pend­ing on the op­por­tu­ni­ties. “We are will­ing to in­vest in good lo­ca­tions and dis­tressed as­sets, and are eval­u­at­ing two malls for ac­qui­si­tion in South and North In­dia. Around 30% of the port­fo­lio money will go into buy­ing re­tail as­sets while the rest is for com­mer­cial as­sets buy,” said Nitesh Shetty, CMD of Nitesh Es­tates.

This year, pri­vate equity money may also go into select mall in­vest­ments, es­pe­cially in un­der-rep­re­sented mar­kets or for buy­out of ma­ture as­sets. As qual­ity mall space is com­ing up with strong pre-com­mit­ments, in­di­cat­ing that re­tail­ers would con­tinue to re­main bullish about the longterm In­dia con­sump­tion story.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.