Tier II and Tier III cities to see maximum retail expansion in coming years: JLL
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orth India is expected to receive a dominating share of the upcoming retail supply in the Tier II and Tier III cities, highlighted a report by JLL.
The report highlighted that the northern region of the country 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 5 years.
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 sq. ft of retail developments. This expansion is driven by growing consumer demand, availability of land and a lack of quality retail developments in these markets until a few years back.
"North India dominates the upcoming retail supply in Tier II and Tier III cities, accounting for 44 per cent of the total. Ludhiana, Jaipur, and Lucknow are the key cities driving this growth. In this region, a diverse mix of established and emerging regional developers are driving supply" said Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.
It also noted that the developers are capitalizing on these opportunities to meet the evolving needs of these emerging urban centers. It added that the upcoming mall supply in these cities will be of a significant scale, with a projected average gross leasable area of approximately 375,000 sq ft. Notably, four of these mall projects are particularly large-sized, each having a gross leasable area of 1 million square feet.
The report stated that retailer confidence in these cities has grown due to the influx of high-quality supply from established developers. Premium and bridge-to-luxury brands are also venturing into these cities, driven by rising consumer aspirations and new opportunities for store openings.
"In recent years, leading real estate developers have acquired land parcels in Tier II and Tier III cities for retail development projects. Notable cities involved in these acquisitions include Jaipur, Lucknow, and Mohali in the northern region," said Rahul Arora, Head - Retail Services & Office Leasing Advisory, Senior Managing Director (Karnataka, Kerala) India, JLL.
Apart from developers, the report highlighted that institutional investors are also focusing on Tier II and Tier III cities for developing retail developments. While prime metro cities (seven major cities viz. Delhi NCR, Mumbai, Pune, Bengaluru, Chennai, Kolkata and Hyderabad) remain the focus of retail real estate investment, a substantial portion of institutionally held assets are now also located in emerging urban centers across India.
With institutional players acquiring assets or partnering for new projects, retailers are also venturing with increased confidence bolstered by the availability of quality and premium-grade malls in such locations.
✔️ Tier II and Tier III cities to see maximum retail expansion in coming years: JLL
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