Tuesday, March 25, 2008

Corporate majors optimistic on retail boom

by Jo Black

As investment rate of 36.3 per cent is driving the Indian growth story, the corporate retailers across the country have announced investments plans amounting to Rs. 1318. 04 billion ($34.6 billion) in past 6 months, for expanding their network of stores by the next four-five years to cash in the retail boom, according to the ASSOCHAM Investment Meter (AIM).

According to AIM, tracking investments during the period September 2007 to February 2008, the organized retail growing at estimated 25 per cent is set to penetrate in the tier II and tier III cities like Pune, Chandigarh and Hyderabad, as they are attracting the major share of investment announcements worth Rs. 275.50 billion ($7.25 billion).

The real estate majors like Unitech and DLF have drawn massive plans to cater to the burgeoning demand of the shopping malls. Capex amounting to Rs.650 billion ($17.1 billion ) is planned to be invested in real estate development for retail space in next four to five years while ‘food and grocery’ is next big retail segment with investment plan of Rs.221 billion ($5.8 billion).

Retail real estate development booms

With mega retail malls coming big way, the real estate development for the organized retail sector has attracted maximum number of investment announcements amounting to Rs.650 billion ($17.1 billion ).

To make the maximum leverage of the retail boom, real estate developers have announced major expansion plans to set up large shopping malls like Unitech with a capex of Rs. 200 billion ($5.2 billion), DLF with an outlay of Rs. 160 billion ($4.2 billion) and a plan of Rs. 150 billion ($3.9 billion) by Parsvnath Developers ltd. to foray into the construction of mega retail stores.

Inflated land prices in metropolitans and growing untapped consumer markets in the smaller cities, the tier II cities such as Hyderabad, Kochi, Goa, Chennai, and Chandigarh are becoming the preferred destination for investment by these leading real estate players for exploring the retail business opportunities, said ASSOCHAM President, Mr. Venugopal N. Dhoot.

 

 

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