Relaxation of FDI norms in retail has brought in some cheer to the badly bruised real estate sector and developers are gearing up to cash in on the expected demand surge.
Raj Jain, president, Wal-Mart India, said the company is studying the shopping and spending behaviour of people across 53 cities, where it can set shop. "Over the next twelve months we should be ready with our research," he said.
Experts feel this "rediscovery" will help improve their credit worthiness and ability to attract new investments.
"This surge in demand will give the much needed confidence and help them attract investments into their other projects as well," said Anshuman Magazine, CMD (South Asia), of the real estate consultancy CB Richard Ellis.
The developers are now taking a closer look at the retail space in their kitty and plan newer developments. Various estimates have pegged the real estate-retail market to be around Rs. 22,000 crore.
"We are analysing retail potential across cities and would soon come out with a strategy and an investment plan," said a senior DLF executive. He refused to divulge any investment figures and said it was still "too early".
Pradeep Jain, chairman of Parsvnath Developers, believes this demand surge would lead to a hike in retail rentals. "Multi-brand retailers would like to set shop within the city and this would help us cash upon our built up retail space in the cities." Parsvnath Developers has close to 2.5 million sq ft retail space in Delhi.
"Over supply of retail space, which was a matter of concern, will now disappear," said Rohtas Goel, chairman, Omaxe.
However, this euphoria comes with a caveat. It would be erroneous to think that retailers would lease space only within the confines of a mall or lease only that space which is being developed by the real estate players.
Anybody and everybody with right space at the right location could be on the radars of organised retailers such as Wal-Mart, METRO and Carrefour.
Magazine feels real estate-retail has a long gestation period and thanks to ongoing global crisis large retailers are not in their best financial health. "I don't feel that large retailers will immediately start elbowing each other to pour investments and lease out space in India."