Commercial Building Boom Predicted for India

Will high-end international retailers be comfortable setting up shop in Mumbai next to "a neighborhood chemist"? They may have to if they want to take advantage of recent votes in India's parliament allowing foreign retailers to open stores in the country, reports Neha Thirani. While their presence is still heavily restricted - big retailers are confined to large cities and cannot buy and sell undeveloped land - “Foreign retailers are most welcome by the builders community,” said Anand Gupta, the general secretary of the Builders’ Association of India and managing director and chairman of the Choudhary & Choudhary Group, a construction company working primarily in Mumbai and Pune.

"In Indian cities with more than a million people, which big foreign retailers are confined to, analysts predict a marked increase in demand for commercial real estate, warehousing and office space," notes Thirani. “In the short term there will be a spurt in demand as retailers set up test stores,” said Harvesp Mehta, director for real estate at Motilal Oswal Private Equity Advisors.

"The paucity of quality rental spaces for the retail sector in the cities where multibrand foreign retailers are expected to enter the market could trigger demand for new projects," adds Thirani. So architects and planners, get your portfolios in order.

“In India, per capita mall space among the top seven metro cities is presently estimated at less than one square foot, with the United States and Europe average being 20 to 40 times that,” said Subhasis Roy, the national director for retail agency at Knight Frank India, a real estate company. "While there are several malls in the works, most won’t be finished for three to four years, he said."