India is expected to garner foreign investment of $10 billion-$12 billion in the next five years in the retail segment with the government’s decision to operationalise foreign direct investment (FDI) in multi-brand retail. Also the country which was witnessing an oversupply in the retail real estate space in the last two quarters and stagnancy in retail lease rentals, is likely to see rentals per square feet (sqft) going up in leaps and bounds with the liberalisation.
The government’s move apart from creating demand for retail space, will boost mall development by opening a chapter in the Indian economy.
Going forward, property prices may also firm up in the future. For one lakh sqft space, the base rental is in the range of Rs 50 lakh to Rs 60 lakh now and it can go up to 100 per cent with the growth in demand, feels Prabhakar Kumar.
“Foreign direct investment can help bring new capital, skills, jobs and technology into India,” he said. However, the decision on in multi-brand retail is left it to the state governments to allow setting up of such stores.
Also around 200-300 international luxury brands are trying to make an entry into India given the fact that the Indian government has encouraged upscale retailers by allowing foreign companies to own a controlling interest of 51per cent in ‘single brand’ joint ventures.