Traditionally, a real estate investment entails purchasing a house or residential unit. The primary reason is that capital appreciation on a home investment is faster, based on market conditions. Consumers in India have long seen housing as a risk-free income-generating real estate asset, making it the top choice for speculating real estate.
However, as the real estate industry has evolved and matured in recent years, other assets, such as retail, have begun to gain influence. According to Ms. Radheecka Rakesh Garg, Director of Rajdarbar Realty Limited, investing in retail real estate can provide investors with a steady income through renting, leasing, or selling retail spaces. These spaces can include shopping centers, individual stores, or pop-up shops. The types of retail stores vary widely and can consist of supermarkets, pharmacies, dry cleaners, or cafes.
The onset of Covid-19 and the consequent lockdowns might have initially slowed down the retail sector. However, it also spurred technological advancement and a slew of innovations as retailers responded to changing consumer needs. This led to the rise of omnichannel retail, which provides a balance between convenient and experiential shopping, and increased demand for offline spaces. As a result, nearly 10.15 million square feet of new mall space will be available in Tier 1, 2, and 3 cities by 2022, with another 7.25 million square feet to be added in 2023.
Ms. Radheecka Rakesh Garg also feels that as shoppers return to more regular shopping and socializing habits, India’s retail real estate market is reacting to significantly improved footfall numbers. Malls and shopping centers are again witnessing high occupancy levels, and the demand for more organized retail space is evident. Moreover, brands are working on their store strategies across regions and efficiently diversifying their portfolios to make the customer experience even better and simpler. CBRE, a real estate consultancy firm study says – in the first half of the calendar year 2022, retail sector transactions grew by a whopping 160% and above 100% in Q2 of the calendar year 2022.
Retailers are attracting customers with new and innovative ideas to increase their online and offline stores. The unprecedented growth of 500% during H1CT 2022 was witnessed over time. All thanks to the opening up of the market after the impact of Covid 19 in the previous year and freedom to the buyers to go out and express themselves after being in isolation for about a year or so.
Despite many advancements, Ms. Radheecka Rakesh Garg also believes that Covid 19 has significantly changed the customer’s mindset; hence, it is time for the retail sector to evolve and deliver according to the needs and requirements of the customer. The eyes must be focused on the customer and their satisfaction. The malls and retail spaces should offer more entertainment and target less of a transactional orientation.
So in retrospect, what lies ahead for commercial real estate? Multifamily and industrial properties have thrived so far in 2022. With healthy balance sheets, consumer demand could further bolster retail, multifamily, and industrial asset classes. Next-door retail has done relatively well in the populated and overpopulated areas, as they not only sell at their shop but also deliver to the customer at his doorstep. For commercial spaces like offices and co-working spaces, the hybrid model is working fine for now, but as always, it is bound to change over time. However, the clear image will depend upon the critical factors of ongoing relationships between public and private entities in affordable housing.