PE investment in retail properties may double to $80mn in 2016

Private equity (PE) investment in retail properties is likely to double to USD 80 million this calendar year mainly on account of liberalisation of FDI policy, according to property consultant JLL India.
"The retail sector can look forward to a more cheerful 2016, given some good initiatives taken by the government," JLL India Chairman and Country Head Anuj Puri said in a report.
In 2015, single-brand retail saw relaxation in sourcing norms, which is expected to rack up FDI inflows in the times to come. Moreover, 100 per cent FDI has been allowed in processed food retailing in this year's budget.

"PE investment has been largely confined to a few retail players in India. In 2015, PE investment into retail properties alone was USD 39 million, and in 2016, it is expected to be in the range of USD 75-80 million," Puri said.
Already, the FDI inflow in retail trading increased between October 2014 and September 2015 to USD 70.75 million, it added.
Economic stability, liberalisation of the FDI policy and improvement in the consumer sentiment will help global brands witness a very conducive environment for investment into Indian retail as well as in retail real estate sectors, JLL said.

"Add to this, the steady rise in shoppers' desire to consume foreign brands due to increased brand awareness, and the scenario looks even more inviting," the consultant said.

As more global brands are expected to enter India, the development of world-class malls, having superlative designs and ambience, would become the need of the hour, it said.
"Retail real estate has been constantly evolving in response to changing consumer, brands and retailers' preferences but the evolution is bound to become faster in the days ahead. This will lead to emergence of stronger retail real estate players, who may manage to get private equity investment in the coming years," JLL India said.
While raising funds through banks continues to be a
challenge for developers, Dena Bank Chairman and Managing Director Ashwani Kumar said for banks debt raised by realty players becoming NPAs is not an issue today as they (banks) are doing due diligence and financing projects of only good developers.

Talking about REITs and InvITs, BSE Managing Director and CEO Ashish Kumar Chauhan said, "real estate has been an enigma and not standardised. REITs and InvITs are important for us and when it is traded on the exchange it will make investors more comfortable."
Explaining the importance of the Real Estate Regulatory Authority (RERA), Piramal Fund Management Managing Director Khushru Jijina said, "REITs is a game changer for the industry. RERA is accelerating the process of natural death of bad developers and will eventually bring consolidation into the market, which is good for the long term."
Maharashtra's housing department Principal Secretary Shreekant Singh said RERA will provide transparency to all stakeholders.

"RERA is not one sided, but the Act has taken care of the interest of both the consumers and developers. Real estate has the largest share in the GDP. We assure that RERA will cover concerns and issues of all stakeholders leading to transparency in realty," he added.