Realty players eye Tier II & III cities; line up over Rs 1 lakh cr

New Delhi, Mar 23 (UNI) Growing at a rate of 25 per cent, the country's organised retailers are set to exploit the potential of the Tier II and Tier III cities, as they have already lined up about Rs 1,31,804 crore in the last six months, a study said today.

''Inflated land prices in metropolitans and growing untapped consumer markets in the smaller cities, the tier II cities such as Hyderabad, Kochi, Goa, Chennai, and Chandigarh are becoming the preferred destination for investment by these leading real estate players for exploring the retail business opportunities,'' Assocham President Venugopal N Dhoot said.

Tracking investments during the period September 2007 to February 2008, the organised retail is set to penetrate in the tier II and tier III cities, as they are attracting the major share of investment announcements worth Rs 27,550 crore, according to Assocham Investment Meter (AIM).

With mega retail malls coming big way, the real estate development for the organised retail sector has attracted maximum number of investment announcements amounting to Rs 65,000 crore.

Real estate developers such as Unitech and DLF have announced major expansion plans to set up large shopping malls. Unitech has fixed a capital expenditure of Rs 20,000 crore, DLF with an outlay of Rs 16,000 crore and a plan of Rs 15,000 crore by Parsvnath Developers to foray into the construction of mega retail stores.

The fast growing Indian economy has given a major thrust to changing consumer behaviour as reflected by the increase in investment announcements worth Rs 29,154 crore for setting up hyper marts, the study added.

Companies like Reliance Retail has set aside Rs 24,000 crore for setting up hyper marts by the year 2010-11 in National Capital Region (NCR), Spencer retail announcing a capex of Rs 3,000 crore for expanding its retail outlet and setting up hyper marts in the next three years.

With huge demand for food and grocery items in the country of 1.1 billion population, the organised retail in this segment is gaining momentum. Capex of Rs 22,100 crore has been planned to be invested in setting up chains of food and grocery stores in next three years.

Reliance Retail has announced an investment outlay of Rs 12,700 crore to set up grocery stores by next two-three years in cities like Hyderabad and NCR. The Aditya Birla group has also announced its investment plan of Rs 8,000 crore to set up a chain of stores in the country in next three to five years.

Companies like Wadhawans Food Retail, Subhiksha, Dabur have also made investment announcements worth Rs 1,500 crore, Rs 300 crore, and Rs 200 crore respectively in tier II and selected tier III cities during the past six months.

While the textile and the garment industry are facing tough competition due to rupee appreciation and high competition in the international market, the industry players are betting on the booming domestic market.

In the past six months, a major expansion was seen in the textile and apparel segment by large retailers including Provogue, Trent, Arvind Mills drawing up the investment chart of Rs 7,900 crore for setting up new stores in cities like Pune, Hyderabad, Navi Mumbai.

Provogue with a capex of Rs 6000 crore has made an announcement to set up 40 new stores in tier II and tier III cities by next fiscal. Other majors fashion brands like those of Arvind Mills, Donear Industries and Trent are upbeat on the robust consumer demand and plan to invest Rs 400 crore, Rs 300 crore and Rs 250 crore respectively.

With more and more corporates investing in the sector, the prospects of job creation will surge in the next five years in cities like Hyderabad, Pune, Surat, and Chandigarh among others.

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