Realtors to add 65 m sq ft mall space by end of 2022

MUMBAI | BENGALURU: Despite the mushrooming of ecommerce business, malls are still serious business as is evident from the plans and proposals of realty developers. The sector is riding high on the phenomenal rise in consumer spending and renewed interest by institutional investors.India is set to get over 65 million sq ft of new mall spaces by the end of 2022. Of this total new supply, the top 7 cities comprise 72% share and the remaining 28%, or 18.2 million sq ft, is slated to come up in tier-2 and 3 cities, said Anarock Property Consultants report.“This new supply is also driven by the increasing interest of institutional investors, including private equity players, who had invested almost $1.9 billion into Indian retail between 2015 and Q1 2019. In fact, over 60% of this investment corpus was infused in 2017 and 2018 alone, making these the best years for the retail sector in recent times,” said Anuj Kejriwal, chief executive officer of Anarock Retail.He said notwithstanding the decline in deal activity in the second half of 2018 following the nonbanking finance companies’ induced liquidity crisis, the retail segment attracted investments of almost $115 million in just the first quarter of 2019. 70017345 In one of India’s biggest transactions to help build a property investment platform, private equity major Warburg Pincus last month entered into a $1-billion alliance with Mumbai-based developer Runwal Group to fund retailled mixed-use projects across the country. This joint venture is planning to develop high-quality shopping malls across tier 1, 2 and 3 cities in India.“There is certainly a need for high-quality retail space and that leaves a lot of potential for institutional investments. Both from the retailer and consumer side, there is strong need for retail and social space and that is what has created the opportunity for the platform Runwal and Warburg have formed,” said Sanjay Dube, CEO, Virgo Retail Venture, a Warburg-Runwal alliance.Since 2015, Indian real estate has witnessed 25 platforms getting created aggregating to $8.8 billion by global investors such as Warburg Pincus, Goldman Sachs, CPPIB, Allianz, Ascendas, Xander, CDPQ, APG, etc. The main purpose of creation of these platforms was to create a pool that can be invested, if the investment criteria are met, without spending long time before each investment.These deals are mostly sector-focussed and were created with the aim to build longterm partnership with the other partner -- mostly a local developer with good market understanding and established execution track record.Apart from platform-level deals, the retail sector will witness new trends and methods of fund-raising, including Retail Real Estate Investment Trusts (REITs).Kejriwal reckons that REITs can be a viable tool for mall developers to raise funds, but this fund-raising instrument still needs to mature sufficiently. Also, the retail REIT structure and performance may not be directly comparable with the commercial office sector.Before the launch of official retail REIT in India, issues such as smaller lease tenure, changing business models, etc., needs to be tackled.

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