India’s retail sector is riding high on the rise of consumerism

V Nagarajan, Columnist

Indian real estate sector is looking at 65 million sqft mall supply by 2022. Despite the onslaught of the e-commerce business across the country, malls are still serious business in India. According to ANAROCK’s latest report, retail sector is riding high on the phenomenal rise of consumerism and renewed interest by institutional investors.

Indian mall developers are looking to add over 65 million sq. ft. of new mall supply by 2022-end across the country.

Of this total new supply, the top 7 cities comprise 72% share and the remaining 28 per cent (18.2 million sq. ft.) will come up in Tier 2 & 3 cities. MMR, Delhi-NCR, Hyderabad and Bengaluru together lead with the new supply aggregating to nearly 34 million sq. ft. in these cities

Region-wise, new mall supply in West India tops out with 25 million sq. ft., followed by South India - 21.7 million sq. ft., North India - 11.9 million sq. ft. & East India - 6.4 million sq. ft.

Besides metros, prominent Tier 2 & 3 cities for retail growth include Ahmedabad, Amritsar, Baroda, Bhubaneshwar, Chandigarh, Cuttack, Dehradun, Goa, Guwahati, Indore, Kochi, Lucknow, Nagpur, Mysore, Surat, Rourkela, and Trivandrum.

 The Indian retail industry has moved from long-term leasing to short-term leasing tenures (3-5 years) to enable constant updating of the brand mix within the mall. Globally, the standard lease term is still above 5 years.

“Of the 65 million sq. ft. of new mall supply hitting the Indian market by 2022-end, nearly two-thirds (40 million sq. ft.) will deploy by 2020-end itself — and not just in the metros. This new supply is also driven by the increasing interest of institutional investors — including PE players — who invested almost USD 1.9 billion into Indian retail between 2015 and Q1, 2019.

In fact, over 60 per cent of this investment corpus was infused in the last two years (2017 and 2018) alone, making these the best years for the retail sector in recent times. Notwithstanding the decline in deal activity in the second half of 2018 following the NBFC-induced liquidity crisis, the retail segment attracted investments of almost $115 million in just the first quarter of 2019,” according to Anuj Kejriwal, MD & CEO - ANAROCK Retail.

The report also maintains 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.

Q: I am in the process of buying a villa from my relative in India. Can I get a joint home loan with my wife who is employed in India? Please clarify. Sanju, Sharjah.

Yes. You can buy and seek home loans as your wife is employed in India and having a regular monthly income. A sale deed is to be registered with due consideration between your relative and both you and your wife as joint purchasers. In the event of sale consideration lower than the market valuation, you may have to pay registration charges and stamp duty as per market rates. The lending institution will ascertain the loan eligibility based on the income, age, repayment capacity and other factors. Your relative will be liable to pay capital gains tax, if any, applicable.

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In the event of death of your father intestate and there is a dispute between the legal heirs, the children will have to approach a competent court, having the jurisdiction to settle the dispute.

In case a beneficiary relinquishes his/her rights to the property in favour of another legal heir, banks or other authorities may insist on an NOC from other legal heirs.

Q:I have let out my apartment for over 10 years in Bengaluru and the tenant is now refusing to vacate. Now I intend reconstructing it as there is a proposal from the developer for redevelopment. The tenant is citing the long stay as the reason and wants a place in the new building. What is the remedy available? Asha, Dubai.

He cannot seek any special protection just because he has stayed over 10 years in your flat. You could invoke any one of the available ground under the Rent Control Act to evict the tenant.Reconstruction is a valid ground to proceed against the tenant and it is not necessary that you should offer him a place in the reconstructed area.