NEW DELHI: Northern region of India will account for 44 per cent of the total retail supply in Tier II and Tier III cities which is expected to come on stream in the next five years, according to JLL.
The retail sector in tier II and tier III cities has drawn an investment of $6,192 million between 2006 and 2017 as against $1,295 million that was drawn by tier I metro cities during the same period. Also, the presence of popular high streets across Tier II locations such as Chandigarh, Lucknow and Bhubaneswar is playing out dynamics in the retail world.
“The retail sector is among the top three employers in the country and its growth will drive the economy of our future cities. Emerging destinations like Lucknow, Jaipur, Chandigarh, Kochi, Indore, Nagpur and Bhubaneswar are going to be the next big retail hubs. It is for this reason, retailers and private equity firms have started taking an increased interest in Indian retail sector through investments in high-end retail malls in tier II and tier III cities,” Pankaj Renjhen, managing director of retail, JLL India, said.
Future drivers
Due to factors such as new high street formats and younger generation of retailers who are willing to experiment, the tier II and tier III cities are said to be the future centres of retail growth in India.
Renjhen said that Ludhiana, Jaipur, and Lucknow are the key cities driving this growth,
The report also added that the Tier II and Tier III cities in the country are experiencing a surge in new retail supply, with 25 million square feet of retail developments.
Chandrajit Banerjee, director general of CII, said that India’s economic potential lies in the growth of smaller cities that have been witnessing transformation on all fronts – urban housing, infrastructure, offices and retail real estate.
Being a key component of this development, he said that retail has the ability to drive future growth and add value to the overall infrastructure of these cities. While there is an opportunity in tier II and tier III cities for this sector, a strong focus is required to build the necessary infrastructure to support the growth.
“Through our National Retail Summit 2017 and the release of an insightful report, we aim to identify the challenges that may impede the growth and leverage the available opportunities.”
