International retailers and investors are back in the reckoning by swinging deals in prime real-estate destinations. According to a report by JLL, the FDI inflow in retail trading has increased between October 2014 and September 2015, to $70.75 million. Additionally, with the steady rise in shoppers’ desire to consume foreign brands due to increased brand awareness, the scenario looks even more inviting.
PE investment has been largely confined to a few retail players in India. In 2015, PE investment into retail properties alone was $39 million, and in 2016, it is expected to be in the range of $75-80 million.
Managing Director – Retail Services, JLL India, Pankaj Renjhen, says, “Institutional investors are investing in shopping malls so as to gain subsequently in the phase of future higher growth in the business cycle and upside market conditions. As the consumption levels and retail sales are increasing overtime, investors are also bullish about the industry. Liberalisation of FDI policy leading to entry of International retailers and consequently increasing demand of quality spaces is further stimulating investments in this sector.”
Adding to this, he says, “Besides it is seen that the global funds are more interested in investing in operational malls as of now as the gestation period of mall construction is long and the market shows variations when the mall is ready.”Here’s a list of international investors who have picked up stake in malls in India, proof of the potential retail real estate has in this country. (With inputs from Zainab S Kazi)
GIC has bought a stake in Viviana Mall, Maharashtra, for a whopping Rs 1,000 crore. According to Business Standard – a leading business daily – this is one of the biggest retail property deals in India in recent years.
The reports states: Singapore government-owned $100-billion sovereign fund GIC bought 50 per cent stake in Viviana Mall in Thane, on the outskirts of Mumbai, for over Rs 1,000 crore. The deal values the mall at around Rs 2,000 crore.
Viviana has a gross leasable area of one million sq. ft. and is one of the biggest malls in the country. It houses brands such as Shoppers Stop, Forever 21, Zara, and Marks & Spencer, to name just a few.
Late last year, Blackstone, a US-based private-equity firm, acquired two retail assets of Gurgaon-based developer Alpha G in Amritsar and Ahmedabad for around Rs 800 crore.
The malls - housed under the AlphaOne brand - are spread over 550,000 sq. ft., and are dedicated to the retail and entertainment segments.
Blackstone has invested about $2 billion in office assets in the past couple of years, becoming the biggest owner of such properties. It is believed to be the first one to float a real estate investment trust.
Singapore-based GIC has also picked up a 50 per cent stake in Runwal Group’s R City Mall at Ghatkopar. The mall is spread over 1.2-million sq. ft.
GIC is one of the world's biggest investors, with over $100 billion in assets in over 40 countries. It is also one of the top 10 real estate investors in the world. Last year, GIC bought 40 per cent interest in five US malls as part of deals involving $5.4 billion worth of real estate.
According to a report in Deal Street Asia, R City is reportedly one of the best performing malls in India currently.
In the largest ever space transaction by any international retailer on high streets across the country, Spanish fashion chain Zara has picked up 50,000 sq ft carpet space in South Mumbai's most prime location of Flora Fountain. The deal works out to over Rs 450 a sq ft per month.
The world's biggest fashion retailer has leased the space on the ground floor of Ismail Building diagonally opposite HSBC's India head office located in Fort.
Market sources said this is the largest high street retail space take up by an international brand ever in India.
The brand is paying a whopping Rs 30 crore a year for renting the space, with a minimum five-year lock-in period.
IKEA is understood to be in talks with Oberoi Realty to buy a retail space for over ?900 crore in Oberoi Realty’s upcoming project in Borivali.
The company is buying retail space spread over 3.5 lakh sq ft and this will be the largest space to be occupied by any single furniture brand anywhere across the country.
The proposed built-to-suit retail space that IKEA India is buying will be part of Oberoi Realty's 25-acre project. The developer had bought the land parcel for Rs 1,155 crore after emerging as the highest bidder for the land parcel auctioned by Tata Steel in 2014.
Last month, Tata Group company Rallis India had also signed an agreement with IKEA India for assigning its leasehold rights for 26 acres of land at MIDC Industrial Area in Navi Mumbai’s Turbhe locality for ?214 crore.