Realty players in hectic talks with retail chains

With decks cleared for multi-brand retail giants to enter India, the country’s real estate developers are busy drawing up plans to tap the fresh demand the development will generate in the commercial realty sector.The government on Friday decided to open up the multi-brand retail sector to up to 51 per cent of foreign direct investment (FDI). Earlier this year, the government notified rules to increases FDI in single brand retail to 100 per cent from 51 per cent.“International retail chains like Walmart, Carrefour, Metro, Spar and a few others are in realestate firms to take up space in mixed use projects and malls. As the retail space market was in a slump with increasing vacancy rates and falling rentals, the FDI policy has come as a major boost. According to a Cushman & Wakefield report, NCR saw the highest mall supply deferment of over 80 per cent, ensuring the city maintained vacancy levels at 28 per cent. NCR saw only 120,000 sq ft of mall supply in January-March and no supply in the April-June quarter of 2012. Developers, who shifted their focus to residential in times of economic slowdown, are back to drawing up big retail plans.ndia’s largest real estate player DLF, which is coming up with a 1.8 million sq ft mall at Noida called ‘Mall of India’, is in touch with all leading foreign players planning to enter India. “Yes, we are in touch with all foreign retail players, they were waiting for clarity on the FDI policy,” said Rajeev Talwar, executive director, DLF. He told Business Standard the company would be more focussed on the retail segment from now on. DLF’s Mall of India is expected to be operational in the third quarter of 2013-14.At present, DLF has 1.38 million sq ft of leased retail space across the country, and earns annualised rental income of Rs 250 crore. Last year, DLF had chalked plans to invest Rs 3,000 crore over five years to develop shopping malls of 3.5- 4.3 mn sq ft.As per Cushman & Wakefield, about 1 million sq ft of expected mall supply was deferred to second half of the year or next year. The overall vacancy rate for the major cities as the April-June quarter stood at 19.6 per cent.