GIC and Blackstone well positioned for retail and commercial assets
Considering that the long-term future of organized retail in India looks secure, investments continue to flow into the segment with a US$733 investment platform for retail-led mixed-used assets launched in June 2021 and US$1.5 billion in March 2021.
In June 2021, a partnership of GIC, a Singapore sovereign wealth fund, and Phoenix Mills Ltd of Mumbai established the US$733 million investment platform for retail-led mixed-used assets in India, Pankaj Renjhen, COO and joint Managing Director of ANAROCK Retail, said in a report on assessment of recovery expected in the retail sector and mall-based assets on 4 Oct 2021.
The Phoenix-GIC commitment followed another international investor Blackstone which formed a US$1.5 billion partnership in March 2021 with Prestige Group for retail and commercial assets’ acquisition in India.
Similarly, adding momentum to the big number investments was Indian heavyweight Reliance Retail which raised Rs.47,265 crore by selling a 10.09% stake to global investors such as Silver Lake Partners, KKR, ADIA and others.
“A Pan-India comparison of retail mall supply additions planned for 2021 depicts more than double growth over the previous year,” said Renjhen, expecting new pan-India retail mall supply of 4.5 million sq ft of new mall supply in 2021 across Indian cities, more than double of 2020 (approx. 2.1 mn sq. ft.).
“The Indian economy is likely to regain its growth trajectory as the COVID-19 effect recedes.”
The Indian retail sector is witnessing accelerated organization. As per industry estimates, organized retail is growing at a 20-25% CAGR per year, and the comeback of new retail mall supply bodes well for the sector.
Overall, there are good times are ahead for Indian retail real estate after a subdued slowdown inorganically cast by the COVID-19 outbreak, according to Renjhen.
With the second COVID-19 wave receding gradually and the vaccination drive picking up pace, consumer confidence is once again heading northwards. Due to a substantial improvement in the general economic situation and employment scenario outlook, the future expectations index (FEI) of RBI’s latest Consumer Confidence Survey returned into the optimistic territory, said the ANAROCK report.
Organized retail penetration in India is less than 10% compared to the developed nations such as the US and UK at 85% and 80%, respectively.
Per capita organized retail space in India is approx. 2 sq. ft per person compared to the US at 23 sq. ft. per person and Dubai at 16 sq. ft. per person.
The ANAROCK report also recalled the big drop in retail sector in 2020, hit hard by COVID-19.
To say that COVID-19 cast a shadow on the Indian retail sector is an understatement, and any hopes for a swift comeback in 2020 fell flat. New mall completions – a lead indicator of the sector’s prospects – were phenomenal in 2019, with around 8.5 Mn sq. ft. added across the top 7 cities. This was a staggering 73% growth over the previous year.
However, with complete and then intermittent lockdowns laying a serious jinx on the sector from March 2020, consumers were under house arrest and buying only essentials via ecommerce portals.
Also, construction took a major hit during the lockdowns. There were severe supply constraints as well as a shortage of semi-skilled and unskilled construction workers.
As a result, new mall completions in 2020 dropped by 75% over the previous year, clocking in at approx. 2.1 Mn sq. ft, according to the report. #investment #projects #banking #economy /fiinews.com
