Foreign investors continue to shy away from Indian retail real estate sector despite it being one of the fastest growing markets in the past three to four years.
Industry analysts blamed the government's policy regarding foreign direct investment into real estate, and particularly retail real estate, for discouraging overseas investors from coming to India.
"The Indian retail sector is in a dynamic state of re-invention, with the initial hit-and-miss approach based on perceived absolutes rapidly giving way to superior malls, more business-conducive locations and better business models," Anuj Puri, chairman and country head of Jones Lang LaSalle India, said.
"There is a clear thrust towards international benchmarks, with growing market knowledge and ever-increasing aspirations driving current and future growth. That said, the sector is still hamstrung by restrictive foreign investment policies, which are reining in the country's potential for attaining faster growth," he added.
The property consultancy firm notes that the fastest growth in retail real estate over the last four years has been in the BRIC (Brazil, Russia, India, and China) markets and China is the only growth market in the top destinations around the globe.
China, Brazil, Turkey and Russia are attracting interest from global players by showcasing some of the marquee deals in the sector. Investors are also exploring opportunities in countries like Mexico, Indonesia, Vietnam, Philippines and Argentina.
"By contrast, India is a notable absentee among the BRIC countries, where government policy regarding foreign direct investment into retail real estate has stunted any potential investment market over the last few years," Jones Lang LaSalle said.
"Although the fundamentals are firmly in place, the regulations are such that both the entry and exit options are extremely limited. The lack of clarity around potential exit options also means that major foreign developers are hesitant to enter the market," it added.
