Merger of online experience with offline shopping experience is the next big thing
A leading player in the retail real estate across the entire value chain, Pioneer Property Zone has over 10 years of experience in the sector and services across major Indian cities. PPZ is a joint venture between ICS Realty, India and Old Mutual Property, South Africa. Najeeb Kunil, Executive Director, Property Pioneer Zone, PPZ in a chat with Hiren Kumar Bose dwells on the trends in real estate sector and future growth
Which are the segments driving growth in the retail real estate sector?
Retail realty is growing at an amazing pace right now. International and home- grown fashion brands are contributing to growth in the retail sector. However, F&B and entertainment are going to drive the retail real estate sector.
The cities, according to you, which are likely to benefit from the growth?
For this year the supply for retail space is likely to cross 3.4 million sq. ft. With the focus on Entertainment and F&B, it is the Metro’s that will see the highest growth, with high spend propensity and double income households. The need of these categories is most felt in the work life people follow in the metros, making these categories the best catalyst for an active social life. More than 180 new retailers entered or expanded their operations in these cities, making them the preferred destinations to experiment with newer
The Indian retail real estate sector still remains largely unorganized despite the presence of big names. What is the percentage of the unorganized retail real estate and what is the timeline you predict for it to become organized?
Over the last 5 years, thanks to the growth in electronic payment mediums organized retail has jumped from a mere 6% to closer to 9% predicted within 2017-18. With the 2-3 tier markets and the mid to lower mid segment markets within the Metros contributing close to 50% of the total retail share, we do not see the unorganized market going away for a long time. As long as our economy keeps growing from the SEC C & D into the SEC B & B+, which translates to more than 600 million people, our unorganized markets will co-exist
Do you foresee the overcrowded real estate sector becoming leaner and meaner with consolidation and joint ventures happening between landowners and/or small developers?
Real estate is considered to be the second largest employer in the country. This establishes the magnitude of real estate in the country. Land remains the most important factor in the sector. With growing population scarcity of land becomes an integral quest for every realty project. Hence reuse of old land or associating with the land owner has become the need of the time. Also, various real estate brands are expanding into new territories where they collaborate with small and existing developers to reduce the risk factor.
Major transitions have happened in terms of design, size, and provision of facilities, tenant mixes, and business models since the early 90s. Massive malls and the arrival of international brands have changed the matrix. What next?
The merger of online experience with offline shopping experience is the next big trend. In fact, the need for better offline experience is greater than ever. Malls and retailers will have to adapt to new technology like mall-based apps, e-boutique, and digital showrooms to lead the way. It has also been observed that the redefinition and reinvention of retail spaces in India to suit the needs of the younger generation is a phenomenon being witnessed in major retail markets across the globe. Experiential activities and community building in retail real estate spaces would be the primary focus, ensuring increased customer dwell time
Thanks to changes in its regulatory framework, India is now way more attractive to both global and Indian investors. Do you think the launch of REITs (Real Estate Investment Trusts) will bring in the cheer for the investor?
India is one of the firmest believers in saving for future trend. Over the years this tendency has evolved and become investment-oriented. Due to the arrival of REITs, masses have got one more platform to invest. REIT’s will allow the retail investor to own a piece of some of the marquee projects within the portfolios of top annuity income based developers in India
PPZ has been around for 10 years now. How has it grown over the years and what are the lessons learned from its growth?
PPZ’s focus has always been to create world-class experiences for our end customers and the highest returns for our investors/owners. Over the last 12 years, our biggest learning has been to create shopping centre designs which are customer-oriented and efficient for retailers. At the same, our learning on the mall management side has been focused on higher sale growth year on year for our retailers. Our teams have been constantly finding innovative solutions either through marketing or technology to improve the overall customer experience in our shopping centres spread across the country.