India's real estate rentals are set to surge in major cities with demand from the fast-growing retail sector expected to treble to 5.57 million sq m in two years, a survey showed.

Jones Lang LaSalle Meghraj, the Indian unit of the Chicago-based real estate firm, said in a report on Wednesday that major retailers were fuelling asset price growth in a rush to acquire space and beat off competition.

"With retailers demand out-stripping supply, double digit rental growth has been a feature of most metros since 2004, and growth is continuing into 2008," it said.

Leading business houses like Reliance Industries, and the Aditya Birla and Bharti groups are investing heavily to cash in on a $300 billion retail industry forecast to more than double in size by 2015.

Jones Lang said retail mall stock in India, which was only 1 million sq ft in 2002, had expanded to 19 million sq ft by 2006.

It is expected to expand to 40 million sq ft by the end of 2007, and 60 million sq ft by the end of 2008, it added.

The rental of a prime retail space in Delhi is expected to rise by about 25 percent annually to nearly 350 rupees ($8.5) per sq ft by the end of 2007, the survey showed.

Rentals in Mumbai are estimated to rise by close to 10 percent this year.
Delhi and Mumbai alone will contribute 40 percent of retail business by 2008, and retailers will need 22 and 15 million sq ft of space respectively in the two cities by then, the survey said.

Source: Reuters India
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