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Malls in tier II and III cities give a return of 18-24 Percent

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India, today has become the next big destination for retail business and if industry insiders are to believed then the next sunrise segment can be the development of malls in tier-II and -III cities. Consumers here have high aspirations boosted by the ever-growing purchasing power and ever increasing dreams to climb up the social ladder. Hence, the challenges and scope for mall developers in these cities are far different from what it would be in metro cities.

In an attempt to study the growth prospects in these untapped markets, it is imperative to study the factors responsible for the growth of tier II and III cities and analysing the potential of these markets. It is equally important to understand the retail market statistics: identification and canvasing of retailers in these regions and to have a categorical knowledge of the leading operational and upcoming retail real estate projects in these markets.

According to Susil Dungarwal,Chief Mall Mechanic, Beyond Squarefeet, if a Mall in metro gives a return of about 10-12 per cent, smaller city Mall gives 18-24 per cent. For a retail company, the overall occupancy cost is lower in smaller towns, thus increasing his profitability.

Dungarwal further adds, “The investment for constructing a Mall in tier-II and tier-III cities could be in the range of 150-200 crores including land acquisition. The cost of construction is the same all over, be it a metro or non-metro, however Land is cheaper in the smaller cities, thereby making them more viable.”

The cover story of December-January issue of Shopping Centre News magazine throws necessary insight into the strategic decisions of retail real estate developers and retailers  moving to tier-II and -III cities and towns. Consumers in small cities want to splurge on food, shopping and entertainment like their counterparts in the metros. In the cover story of Shopping Centre News, we have debunked the myth that the non-metros are made up of poorer cousins of the people living in the metros and bring in front of you the insights and views of the analysts, mall developers and retailers on how they perceive modern retail to shape up in the tier II and III towns.

Please refer to the December-January issue of Shopping Centre News magazine to read this exclusive and insightful story in detail.

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