Real estate developers have only planned for 143 million square feet of mall space over the next five years, leaving the retail industry with a space shortage of approximately 40 per cent, is the conclusion of a study conducted by ICICI Property Services and retail consultancy firm, Technopak.
The study estimates that the total real estate required by the retail chains in India will be in the range of 500million square feet of which shopping malls would occupy 250 million square feet.
The study also concluded that the demand for quality real estate in India is expected to grow exponentially over the next four to five years, fuelled by the demand from the organized retailers.
"India is getting into an interesting phase as far as retail and real estate is concerned and we will continue to see more world class shopping ambience being created by developers. Builders backed by global funds and skill sets are now equipped to look at long term perspective and hence create centers, which can be benchmarked against the very best in the world and take Indian real estate sector in to the next orbit," said V Vaidyanathan, executive director, ICICI Bank.
One of the key recommendations by the study to the retail sector has been the introduction of mall management. Shopping mall owners have mostly developed properties and then sold it to others who further lease it to retailers.
This has resulted in the emergence of unplanned and uncontrolled development of malls, which may lead to eventual loss of rental values.
The report also says that the mall owners and developers need to consider the importance of controlling and managing their malls in order to maximize the value on their investments.
Currently the market share of the modern retail is just over 4 per cent of the total retail industry, thereby leaving a huge untapped opportunity.
The sector is expected to see an investment of over $30 billion within the next 4-5 years. Technopak estimates that modern retail in India would be worth $175-200 billion by 2016.