In Tier II and III cities Hypermarkets Will Grab The Maximum Retail Real Estate Space

FDIs have entered the Indian retail sector in a big way, skyrocketing demand for real estate space, adding fuel to the already feverish pace at which this sector is growing. Unlike top real estate projects that are confined to metros, retail penetrates even tier II and III cities that have low development of such retail centers. Growth in these cities is expected to reach 35% in the next three years. Real estate developers in these cities are bound to get on to the bandwagon and push retail real estate space.

The giants in this segment like Wal-Mart, Big Bazar and Tesco will account for the highest space in these cities. They are likely to focus on cities with a population of more than a million in the first two phases, taking into account logistics and infrastructure.

This will have a decided influence on the cost of the land, the main component in retail real estate. Prices are expected to go up and it remains to be seen whether developers focus on this or the more lucrative residential projects that have an equally high demand, if not better. These giants will absorb ailing retail players and then when they expand, land prices should really climb by about 30% in three years’ time in the face of more demand.