Track2Realty: Cushman & Wakefield have estimated that the share of luxury retail space in India will be a modest 1.44% by 2015 as against the current 1% even as total retail malls stock is set to increase by 27% by 2015.
In its report, which highlights the changing luxury retail scenario in India, Cushamn & Wakefield says that of the total current operational mall space in the organized retail sector across the top seven cities of India is estimated at 66 million (approx.) sq. ft. of which luxury retail space is only 770,000 sq. ft.
The relative reach of luxury brands present in the malls of top seven cities in India is the highest in NCR at 38%, followed by 21% in Mumbai and 17% in Bengaluru.
NCR and Mumbai have been favoured destinations for luxury retailers as they have marked the evolution of mall culture in the country. However, lately luxury retailers have started focusing on Bengaluru as the next upcoming destination with its development as an IT Hub and higher disposable income.
Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield, said “Luxury retail has specific requirements in terms of location, ambience, adjacency of exclusive brands etc. which are critical as luxury retail is more about creating the right kind of purchasing experience. Contrary to belief, luxury retailers in India have shown a preference for exclusive mall spaces as against main streets or hotel properties as these are the only locations that match up to international standards. The current estimated mall space fit for luxury is only 1% of the total operations mall space and is expected to remain the same in the next couple of years. Thus even with intensions of establishing or expanding in India, most global luxury retailers are skeptic on account of available retailing space in India. ”
Meanwhile, cities like Pune, Chennai and Hyderabad are yet to gain traction from luxury retailers in malls as they have relatively low luxury brand reach and are yet to catch up with the mall culture to the extent witnessed in NCR, Mumbai and Bengaluru. A similar trend was observed while analyzing penetration of luxury retailers in each of these cities.
“It is estimated that there will be an increase of five times in the number of ultra high net households in India with a minimum worth of US$ 250 million and more by 2016 – 17, also indicating a corresponding increase in purchasing power of luxury within the country. Yet with limited growth on support infrastructure in India, luxury retail may not be able to grow at the same pace as desired,” adds Sanjay.
On the other hand, the reach of luxury brands in the prominent main streets of the top seven cities in the country was led by Mumbai and NCR each having 30% reach, followed by Hyderabad with 16% reach. Hyderabad emerged as an exception in wake of low vacancy and limited mall supply in the city, thus resulting in increased presence of luxury retailers on its main street.
