Khan Market costliest retail locale in country Khan Market in Lutyens' Delhi is India's new elite high street, having emerged as the most expensive retail location within India. Over the last one year, Delhi's micro markets have emerged as the costliest ones in the country, dethroning those from Mumbai. Khan Market ranks 24 on the global list, which is quite something considering it didn't even figure in last year's list. Last year, the top Indian market was Mumbai's Linking Road at No. 41.New York's Fifth Avenue continues to retain the top position followed by Causeway Bay in Hong Kong in second position and Avenue des Champs Elysees of Paris in third. This ranking is according to Main Streets Across the World 2006, an annual report on global retail rents by global real estate consultancy firm Cushman & Wakefield (C&W). Because of the huge demand for rental space, the increase in rents in Delhi is the highest in the world over the last year. During this period, rents of retail space in certain micro markets like Greater Kailash, South Extension and Connaught Place in Delhi have more than doubled. This is also in part because of the sealing drive undertaken by the civic authorities under the instruction of the Supreme Court. Rents in South Extension witnessed an increase of 111.5% to Rs 550 per square foot per month (psfpm) from Rs 260 psfpm last year. Similarly, rents of retail space in Greater Kailash and Connaught Place increased by 110% and 100% in the last one year to Rs 525 psfpm and Rs 400 psfpm respectively. The rise in rentals in Mumbai markets is relatively moderate. Rents in Linking Road, which commanded the highest rates in India at Rs 285 psfpm a year back, increased by 58% to Rs 450 psfpm at present. Similarly, other areas like Kemps Corner and Colaba Causeway also witnessed rise in rents by 28% and 36% to Rs 275 psfpm and Rs 225 psfpm respectively Source: TOI

Retail groups are now relying on real estate and thereby consider location to be the most critical part of the retail strategy.

The raring to go Bharti-Wal-Mart joint venture between the US retail giant Wal-mart and Sunil Mittal's Bharti Group has opted to follow the US giant’s global model even in India by setting up stores at least 10 kms away from residential hubs. This will set the trend for shopper and shopaholics to go to the retail store with a purpose to shop instead of straying in for the sake of ameteur window shopping while you have other shopping areas around.

The Bharti-Wal-mart joint venture company, is looking at a variety of options such as leasing, renting and owning property. the company is also contemplating that, land for the venture to be bought by a group of big-ticket financial investors who will lease out the land to the Bharti-Wal-Mart alliance for which a fund could be set up. This they believe will further reduce the dependence of the alliance on developers.

With rents going through the roof, its easy to see why rentals of prime retail properties, such as malls and multiplexes, have shot up by as much as 60-70% in the last one year. At present, rentals in Delhi’s CBD (central business district) varies between Rs 175-250/sqft and that in the SBD (suburban business district), comprising satellite towns, is approximately Rs 125-150/sqft. Rentals in Mumbai are even higher at around Rs 350/sqft in the CBD and Rs 200/sqft in the SBD.

All these reaffirms that real estate is to become the most critical part of the retail strategy. But how dependent are the businesses on each other?