Industry experts feel that real estate sector may witness some corrections in rentals. This they say is due to that for hypermarkets operating on discount formats, where margin is the biggest concern. Hypermarket owners won’t be happy suffering further margin constraints due to high rents.

Some corrections in rentals in the retail sector becomes even more inevitable as the existing rent structures are not attractive to sustain the interest of retailers, particularly those playing the price game. However, the space crunch is evident from the fact that in the last couple of years, rentals have continued to shoot through the roof despite a pan Indian supply of 15 million sqft of retail space.

Just as for instance, in NCR alone, retail space of almost 5-mn sqft was developed by DLF, Ansals, TDI and Aerens Goldsouk. While,the total retail space under construction in various parts of the country add up to about 150-mn sqft which will be ready for possession by 2010.

But despite this, the retail sector is likely to face an acute shortage in terms of available space as more and more players like Reliance, Tesco, Walmart and Carrefour enter the market. Not to forget the expansion plans and the ongoing demand coming in from existing Indian hypermarket chains like Pantaloon, Piramyd and Vishal Mega Mart.

Do you agree that rental corrections are inevitable?
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