High prices of luxury space rentals, lack of suitable retail real estate making it tough for luxury brands to expand business in India. Indian cities rank among the lowest in a recent study on luxury retail penetration in top Asia pacific cities. Steep rentals and lack of quality retail real estate at strategic locations near high income neighborhoods are making it hard for luxury brands to expand their business in the country in a viable manner, forcing many players to tweak their business plans and go slow. Established retailers like Reliance Brands, which operates a large number of stores for several international luxury brands, find it challenging to justify investments.
Rentals in India are as high as international markets, but the demand is not as much.
Indian metros emerged among the lowest in a recent study on luxury retail penetration in top Asia Pacific cities. Delhi, Mumbai and Bangalore rank at 25,26 and 27 respectively, according to the report of property consultant JLL which tracked the presence and expansion patters of 100 top international luxury and mid tier retailers in 30 major Asia Pacific cities.
Rentals in India are as high as international markets, but the demand is not as much.
Indian metros emerged among the lowest in a recent study on luxury retail penetration in top Asia Pacific cities. Delhi, Mumbai and Bangalore rank at 25,26 and 27 respectively, according to the report of property consultant JLL which tracked the presence and expansion patters of 100 top international luxury and mid tier retailers in 30 major Asia Pacific cities.
Given that the size of consumer spending in Indian cities is still on the threshold of growth when seen in the Asia Pacific context, the break-even period for retailers here is discouragingly high.
The handful of malls charge anywhere between Rs 300 and Rs 1,000 per square feet per month and on top of that around 50 per square feet for maintenance. Then, there is 12% service tax, Mall operators defend their pricing, saying they are currently investing in building the right ecosystem for luxury business to flourish in an emerging market like India. And rentals in India affect profits. Hot Deals
We have to constantly invest in building a destination for luxury consumption. And that requires money. Mr. Mehta of Reliance brands said he has launched at least four international fashion brands online by exclusively tying up with portals like FlipKart and Jabong.
As of now, a total of 70.7 million sq ft of retail space is ready and operational in top seven cities of the country. Out of this 25 million sq ft is grade A and it is completely taken up with zero vacancy, while the vacancy level for total retail real estate space is 12%. Although no sharp reduction is expected in rentals, the price gap between prime and affordable assets may reduce as 3.9 million square feet of retail space is getting added by the end of 2014 and 8.4 million sq ft by 2015 end. Of this total space, around 50% is going to be of grade A. More malls have started positioning and reserving space for luxury retailers.
Irrespective of the financial strength of a company, profitability is the focus.
The handful of malls charge anywhere between Rs 300 and Rs 1,000 per square feet per month and on top of that around 50 per square feet for maintenance. Then, there is 12% service tax, Mall operators defend their pricing, saying they are currently investing in building the right ecosystem for luxury business to flourish in an emerging market like India. And rentals in India affect profits. Hot Deals
We have to constantly invest in building a destination for luxury consumption. And that requires money. Mr. Mehta of Reliance brands said he has launched at least four international fashion brands online by exclusively tying up with portals like FlipKart and Jabong.
As of now, a total of 70.7 million sq ft of retail space is ready and operational in top seven cities of the country. Out of this 25 million sq ft is grade A and it is completely taken up with zero vacancy, while the vacancy level for total retail real estate space is 12%. Although no sharp reduction is expected in rentals, the price gap between prime and affordable assets may reduce as 3.9 million square feet of retail space is getting added by the end of 2014 and 8.4 million sq ft by 2015 end. Of this total space, around 50% is going to be of grade A. More malls have started positioning and reserving space for luxury retailers.
Irrespective of the financial strength of a company, profitability is the focus.
