India’s leading retailers, shopping centre developers, realty consultants, analysts congregated in Mumbai for two days at IRF 2016 in September to take stock of the retail and retail real estate sectors, and determine if a radical change in approach is required for this asset class.
In this issue of Shopping Centre News, we have covered the discussions, perspectives and viewpoints of the speakers and analysts on the opportunities and challenges related to the retail realty sector and how some old ideas no longer work.
Over the last decade, the unprecedented growth of consumption in India has driven an explosive expansion in retail and retail real estate industries. As the fastest growing major market of the world, India today is not just an extremely attractive investment destination for retailers and consumer brands, but is also a highly dynamic marketplace.
As a result, Indian retail real estate has moved very quickly forward from 1999 to 2016, evidenced by the steep climb from just two to 720 malls today. However, equally striking is the vacancy levels in many of these properties — 17 percent on an average. In poor grade malls, average vacancy is at 43 percent, as JLL’s Anuj Puri said at IRF 2016. While in 2008, there were 108 developers working in the retail real estate space, in 2011, that number went down to 66 and in 2016 the country is left with only 25 mall developers. If this trend were to continue, only a dozen shopping centre developers will be in existence by the year 2020.
As you will read in our Cover Story, at the heart of the lack of analytics- led strategies in shopping centres is a fundamental flaw in developers’ approach — the fact that most continue to treat shopping centres as real estate properties rather than a distinct asset class. Unless mall developers imbibe a real understanding of retailing as a business, they will fail to optimise the value of data-driven differentiation. A more educated comprehension of retail will ensure that malls in India move beyond positioning themselves as shopping haunts, and it is critical that they do — because the consumer has moved on to lifestyle experiences. Of which, shopping is just one component