Friday, 7 December 2012

IF BIHAR ALLOWS MULTI-BRAND RETAIL; ITS IMPACT ON PATNA’S MALL




Mall in Patna of our Dream
FDI in multi-brand retail will have two fold impact on the Patna's real estate sector. First, it will increase demand for anchor space in Patna  if the state government agree to permit foreign retailers ; secondly there is a possibility that rental expectation would be raised, as not much of quality space would be available, suitable for big-box retail.


For multi-brand retail, anchor space in upcoming, under construction ; project launch stage malls in Patna, the Indian ; existing foreign companies are either in negotiation stage or signed up space at these new upcoming projects in Patna. Therefore it will put the new entrants in a tight spot, as they will have to look for only new upcoming projects going to be operational only after 3-4 years from now.


In our country, per capita mall space among top 7 metro cities is presently estimated at less than a square feet, with US and; Europe average being 20-40 times of India. As far as Patna is concerned, we can talk only of one Mall in the city, which is P and M mall in Patliputra Colony, till now. Though there are about 4 malls in almost completion stage in Patna. Patna district has a population of about 58.5 lakhs according to 2011 Census. Steady GSDP growth and; young population( we are among the youngest state in the country population's average age) having more disposable income, can attract investment for mall development in Patna. As compared to developed market, the square footage in Patna is very low ; there is steady increase in rentals due to shortage of available quality retail space, this could trigger new projects.

With multi-brand retailers exploring opportunities in Patna, demand for retail space is likely to rise significantly. This will induce developers to launch new malls and, as store size requirements are significantly higher for multinational retailers, will encourage them to build larger malls along with sufficient mall infrastructure. Quality will also receive a significant boost as the malls will be constructed to meet international standards and norms. The competitive environment is likely to enhance the productivity and efficiency of domestic retailers; with better and more transparent pricing, sales will improve significantly. Domestic retailers will also leverage their portfolios by adopting many of the new retail strategies followed by large international retailers.


The average size of shopping malls in India has already begun to increase as developers focus on larger spaces and the trend would be seen in Patna too. The success of a mall does depend on its size as superior grade malls are nearly double the size of average grade malls. It is estimated that the average size of a superior grade mall is 400,000 sq ft, whereas the normal size of average grade and poor grade malls are 190,000 sq ft and 150,000 sq ft, respectively. This means we are talking about a sea change in Patna’s real estate scenario. The larger malls allow for a complete tenant mix in various formats and categories, and can adopt modern mall management practices easily. With the introduction of FDI in multi-brand retail, the average size of a mall is likely to increase as foreign retailers tend to occupy large spaces. As a consequence, both total mall supply and size are expected to increase over the medium to long term.

No doubt the real estate industry in Patna would get a boost and international quality in construction, planning and execution will be adhered to. The malls also mark a change in Lifestyle and Landscape of any city.

All these can happen only when the state of Bihar allows FDI in multi brand retail.

Mall in Patna as in Dubai