The retail sector has reason to cheer on the back of recent government initiatives. “In 2015, single-brand retail saw a relaxation in sourcing norms, which is expected to boost FDI inflows in times to come. Moreover, 100 per cent overseas capital was allowed in processed food retailing through the Foreign Investment Promotion Board (FIPB) route,” the report said.
There is already a steady rise in shoppers’ desire for foreign brands due to increased brand awareness. Moreover, FDI inflows in retail trading increased between October 2014 and September 2015 to $70.75 million, the report said.
“Economic stability, liberalisation of the FDI policy and improvement in consumer sentiment is expected to help global brands witness a conducive environment for investment in the Indian retail and retail real estate sectors,” JLL said in the report.
Foreign brands such as Carl’s Jr, H&M, Aeropostale, Gap, Wendy’s, Barcelos and Jamie’s Italian entered India in 2015.
Going forward, in response to changing consumer, brands and retailers’ preferences, evolution of retail real estate is bound to become faster in the days ahead, which will lead to the emergence of stronger retail real estate players, who may manage to get PE investment in the coming years.
“In 2016, PE may also go into select mall investments, especially in under-represented markets or for buyout of mature assets,” JLL said. Moreover, as quality space is coming up with strong pre-commitments, it indicates that retailers continue to remain bullish about the long-term India consumption story.
Lack of quality retail space will continue to cast its shadow in the year and retailers will have to rejig their real estate strategy and adopt a flexible approach customised to different micro-markets.
“Investment by both home-grown and international brands will strengthen in tier-2 and tier-3 markets as they expand beyond tier-1 cities. Investment by large players will also be seen in 2016,” it added.
Credits The Hindu Business Line