Home Retail Jones Lang LaSalle Meghraj identifies India 50 — the emerging cities for...

    Jones Lang LaSalle Meghraj identifies India 50 — the emerging cities for retail activity

    By  
    SHARE

    Highlighting the growth opportunities and the emerging geography of Indian retail and property market activity, released its World Winning Cities report on Indian retail. The report entitled “The Geography of Opportunity – The India 50” is the first in a series on Indian Retail Futures. It highlights the significant opportunities for both domestic and international retailers and property investors across a broad range of geographies and formats.

    “The Geography of Opportunity – The India 50” paper highlights that India’s retail sector is evolving at a swift pace, fuelled by a strong economy, favourable demographics, rising wealth levels and rapidly changing lifestyles and consumer aspirations of an ever-burgeoning middle class. The real estate sector has responded well to this retail growth. The total retail mall stock has been doubling every year, from a meagre one million square feet in 2002 to a staggering 40 million square feet by end of 2007, and an estimated 60 million square feet by end of 2009.

    The research identifies 50 Indian cities that are ideally positioned to benefit from the booming retail sector. The report launches a new retail city classification based on socio-economic characteristics, retailer activity and shopping mall development. The research identifies five types of cities (Maturing, Transitional, High Growth, Emerging and Nascent), each of which is at a different stage in its retail market evolution and offers different types of opportunities for retailers and the property sector.

    Organised retail activity is still overwhelmingly concentrated in Delhi and Mumbai (the Maturing cities), and considerable opportunities still exist in these two vast and diverse metros. These two metros are expected to contribute 40 per cent of national organised retailing by year 2008. Delhi and Mumbai lead the Indian mall culture with estimated total mall stock of 22 million and 15 million square feet, respectively, by 2008-09.

    Nonetheless, the report concludes that increasing competition in the NCR and Mumbai markets, combined with growing opportunities in India’s regional markets, is encouraging both retailers and property developers to move into new and potentially more rewarding markets. Organised retailing in India’s other main cities such as Bangalore, Kolkata, Hyderabad, Pune and Chennai (the Transitional cities) is growing rapidly. However, such is the pace of change that many smaller tier III cities are now firmly on the radar of the retail sector and mall developers.

    , CEO, Jones Lang LaSalle Meghraj, says, “India’s 50 cities identified in our report clearly offer substantial and compelling opportunities for India’s growing retail sector. With a population of over 1 million each, these cities will form the very core of India’s emerging retail hierarchy. Interestingly, the top 15 cities (Maturing, Transitional and High Growth) from the 50 retail destinations are expected to contribute more than 80 per cent of the total national retail business by 2008. India’s retail awakening is characterised by rapidly changing customer behaviour, new market entrants and evolving government policy. It is imperative to comprehend India’s enormous cultural and regional diversity to get a realistic perspective on the opportunity at hand.”

    The report highlights tertiary cities such as Chandigarh, Ludhiana, Jaipur, Lucknow and Kochi (the High Growth cities) as leading the pack, attracting considerable retailer interest due to high incomes and strong brand awareness. The “next retail destinations” over a three-year horizon are likely to be Emerging cities such as Nagpur, Coimbatore and Thiruvananthapuram, where IT/ITES companies are expanding their workforces, which in turn is stimulating retailing activity. The more pioneering retailers and mall developers are now seeking to benefit from first-mover advantage and are moving into Nascent cities such as Aurangabad and Rajkot, which are likely to provide good long-term opportunities.

    “Emerging City Winners” is Phase IV of Jones Lang LaSalle Meghraj’s World Winning Cities research. It brings to the fore cities that are already buzzing with retail activity and those which are catching up rapidly to be the next retail hotspots. Many of these rising urban stars offer significant retail opportunities and have not traditionally been on the radar screen on the property sector.

    – Bangalore Bureau