Susil S Dungarwal, Chief Mall Mechanic, Beyond Squarefeet, suggests the Indian government to declare all malls as tourist destinations and give them tax sops to propel the growth of the sector. According to him, shopping can any day draw more tourists than any other attractions. Markets like Dubai, Singapore, Bangkok, Kuala Lumpur, etc are a testimony to this, says Dungarwal.
What is your assessment of the Indian retail real estate market?
The growth has been phenomenal. However, the industry took a mushroom growth path rather than a planned one. Everyone wanted to build a mall without understanding the business model and the science of shopping. I feel the growth could have been more robust if some brains were used rather than the money. What we have now is malls all over with a very low success ratio. This could easily have been avoided. The need to plan mall business is getting serious by the trend currently in vogue.
What is your vision for the Indian retail real-estate industry in 2020 and beyond?
By 2020, we will be at the curve of growth again, with malls of a modern nature springing up, having all the key components of enticing the customers for a “full-day outing”. The year 2020 will be a great milestone, with a lot of consolidation happening. We will see many international mall development companies setting up shop in India or creating joint ventures with local talent. The consolidation of the mall industry would become very critical at this juncture, which is truly unavoidable.
What according to you are the critical bottlenecks the industry must overcome to grow to its maximum potential?
The local construction norms and FSI regulations are outdated and need to be modified in the modern context so that malls can become community centres for the society. The approvals from local bodies (municipal corporations) is a painstaking task and many a times the key reason for the delay in the project, which then leads to making the sector non-viable. The other critical bottleneck would be the availability of the knowledge/talent, which is already draining the industry.
Why is the Indian retail real-estate industry lagging behind the West and China?
Most malls in India are built as real-estate projects rather than retail concepts. Developers have to consider malls as long-term investments. About 90 percent of the malls in the country have failed because the builder is not bothered with the success of the retailers or customers. This mind-set needs to change. In all other markets mall are a pure “retail venture” with long term return on investment unlike India. The Indian mall developer will have to relook at their business models.
What will help the Indian retail real estate industry consolidate?
The first thing the government should do is to declare all malls as tourist destinations and give them tax sops to propel the growth of the sector. Shopping can any day draw more tourists than any other attractions. Markets like Dubai, Singapore, Bangkok, Kuala Lumpur, etc are a testimony to this. Industry bodies like the SCAI, RAI, CII, etc. should put pressure on the government for such vital decisions. The growth of the sector would be certain if these steps are taken.
What impact will FDI in single and multi-brand retail have on the prospects of the retail real-estate industry?
By 2020, we will see the real impact of FDI. By then, many players would have come and settled in the country, making room for more to come. The sector will surely see competition for space and talent by 2020, which is going to surge again.