According to global real estate consultants Cushman & Wakefield, first half of 2016 witnessed the highest annual PE investments in retail with over INR 33,500 million being invested, compared to only INR 2,500 million invested in H1 2015. This is the highest annual PE investments made since 2008. Owing to factors such as improved leasing activity, relaxed government policies and positive economic outlook, institutional and PE investors are more confident towards investing in retail assets. Moreover, with the government clearing tax hurdles for Real Estate Investment Trusts (REIT), PE funds are increasingly exploring opportunities in the retail sector as the retail assets can also be listed under a REIT portfolio. The share of retail sector assets in cumulative PE investments in India has therefore, increased to 18% in H1 2016 as compared to 2% recorded in H1 2015. H1 2016 also saw new mall supply increase to 4.8 msf in H1 2016 from a mere 0.2 million square feet (msf) in H1 2015. This is the highest half yearly supply in five years. Delhi-NCR accounted for the highest supply during H1 2016, followed by Pune and Mumbai.  These new mall spaces are expected to provide quality spaces to retailers, and wider options for expansion across multiple cities.

Owing to completion of Mall of India, which is one of the largest malls in India, Delhi NCR accounted for 64% of the share in new supply during the first half of 2016. However, Delhi NCR also accounts for the second highest vacancy rate (20%), owing to over-supply of retail spaces in the market. Pune witnessed three malls becoming operational, spanning a total of 0.8 msf during H1 2016, while Mumbai witnessed 0.4 msf of mall space coming into supply. Delhi NCR and Mumbai remain the largest retail markets, accounting for 35% and 20% respectively of the mall stock across the top 8 cities in India. Bengaluru is the third largest market, accounting for about 12% of the total stock.

The organised retail space that was witnessing a slack for the past few years, seems to have shifted gears and is attracting retailers as well as investors. Higher investors’ interest and anticipation of a revival of the retail sector is steering developers to focus on completing their under-construction malls.

Anshul Jain, Managing Director, India, Cushman & Wakefield, said “The Indian retail market appears to have bottomed-out from its slack and is expected to grow in the coming years. Factors such as positive economic outlook and large market potential continue to attract retailers to India. In addition to consumer spend, which increased by 10% during last 12 months, E-commerce is also contributing majorly to the increased retail spending by Indian consumers.”

He further adds on the expected trends, “We are expecting to witness some e-commerce companies take up physical spaces in malls to reach out to a wider Indian audience Retailers are also increasingly consolidating their operations by mergers and acquisitions to cut down competition, gain market share and capitalize on synergies to get better results for their bottom-lines. All of these trends are resulting in increased investments by financial institutions and PE funds in this asset class. This is a more encouraging development than just an increase in leasing or rentals, as focused and more institutional ownership of malls will help to bring in even more professional management and development of the malls leading to maturing of the retail sector within India.”


Since 100% FDI in single brand retail is allowed under the automatic route, several foreign retail brands have entered India and are rapidly expanding their chains. Some of the prominent retailers that have entered Indian markets in H1 2016 are Muji, BoConcept, Neil Barrett, Massimo Dutti, Armani Exchange, and Cole Haan. Several retail brands such as Kate Spade, Cath Kidston, Apple, Ikea, etc. are in process of opening their first stores in India. Other internationals brands that have already entered India through the 100% FDI route or through partnerships/franchisee models such as Vero Moda, Zara, H&M, Marks & Spencer, Forever21, McDonalds, Burger King, Starbucks, Pizza Express, Cinepolis, etc., are expanding their chain of stores rapidly across the country.


Total new supply of about 13 msf across the top 8 cities is scheduled for completion until the end of 2018. Over 46% of this upcoming supply is located in Bengaluru and Chennai, split almost equally between the two cities. With rise in demand and declining new supply, the vacancy rates are expected to taper over the next 1-2 years, creating a more balanced equation between demand and supply.

For more details, contact

Piyali Dasgupta,

Sr. Director, Marketing & Communications

piyali.dasgupta@ap, | 022 67715555