Retail Expansion spills over to Tier II and III cities in India

                                                                                         

The Indian organised retailing story is no longer limited to Tier I cities. The retail vehemence has entered Tier II and III cities in the country according to real estate services firm Jones Lang LaSalle (JLL). The firm also expects retail supply to be created in SEZs as well as for mall developers to adopt a revenue sharing moderl with retailers.

The spectacular growth in the major metros has infused confidence in developers and occupiers to expand into smaller cities. JLL estimates a total of 58 million sq ft of mall space to be developed across Tier I, II and III cities by end-2007. About 45% of this will be in Tier II and III cities such as Ahmedabad, Pune, Kolkata, Hyderabad, Chandigarh, Ludhiana, Kochi, Jaipur, Lucknow, Kanpur, Coimbatore, Agra and Amritsar.

The share of Tier II and III cities is expected to further increase in the next two to three years as more and more players express interest in these cities. Most of these Tier II and III cities are state capitals, educational hubs or satellite cities with population size of more than a million.

Retail players are primarily focusing on value-added offerings such as modernised retail formats and luxury malls in Tier I cities. On the other hand, Tier II and III cities are untapped markets where players are looking at gaining the first-mover advantage. Majority of the retail developments in Tier III cities are expected to be part of large mixed-use projects that include residential, entertainment and hospitality developments.

Quality retail supply is also expected to be developed in the special economic zones (SEZ) across the country. As per the government SEZ guidelines, up to 65–75% of the total approved SEZ area can be utilised for support infrastructure such as residential units, schools, retail establishments and hospitals.

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Source: IndiaRealEstateblog

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