'Organised retail to grow, rentals to increase'

Organised retail is poised to grow as consumption rises, while the rentals of real estate properties, which have recently touched their cyclical lows, will appreciate significantly, according to Pinaki Mishra, partner, retail, Ernst and Young.

Speaking at a panel discussion on 'Innovation in real estate for retail', organised as part of the ISB Leadership Summit, he said the supply of organised retail space will double from the present 40.1 million sft to 80 million sft by 2012. The luxury segment would also see a spurt due to demand.

The organised retail in India is valued at $410 billion and is growing over 11 per cent a year. The growth in the retail segment will be sharp in Tier I and Tier II cities and not restricted only to the metros.

There will be demand for mid-sized malls are as the smaller ones are not able to meet the demand and very large formats are not suited for India as yet. "There is still time for super malls coming to India,'' he said adding that the revenue models will also shift from pure rental model to claiming a percentage of the total sales.

The retail organised sector in India is plagued by problems such as poor site selection and mall management, improper rental mix, and inappropriate merchandise. Also, many malls did not include local retailers, he said.