After setting up its real estate arm SITQ a couple of months ago, Canadian fund manager Caisse de depot et placement du Quebec is starting operations of its mall management and investment arm Ivanhoe Cambridge in India soon.

Caisse manages nearly $155 billion of pension and insurance funds in Canada and North America while Ivanhoe has 70 shopping centres in Canada, the US, Europe and Latin America, totalling 46 million sq ft.

Last year, Caisse announced that it plans to invest $1.7 billion in Indian real estate in the next five years.

Ivanhoe is currently in discussions with a number of Indian developers for investments and expected to complete deals in a couple of months. The company has set up an office in Delhi and is likely to open site-specific offices once the company makes investments in new malls throughout the country, said Phil McArthur, senior vice-president, Ivanhoe Cambridge India.

The company is expected to hire a dozen retail realty specialists, who will manage the design, construction and retail management operations of the firm.

"With organised retail accounting for less than 10 per cent of retail sales, we see great potential for shopping centres that are well planned, have a strong mix of brands, services and entertainment," said McArthur.

Asked about proposed investments, he said: We have no specific target as we are currently researching the India retail real estate sector...we are looking for investment opportunities that match our objectives.

"With property prices falling, most foreign investors are looking at investing in the Indian property market. They believe the market has a lot to offer in the long run,'' said Bappaditya Basu, associate director, Jones Lang LaSalle Meghraj, a property consultancy.

According to property consultancy CB Richard Ellis, nearly 100 million sq ft of retail property development is in the pipeline. Some of the biggest shopping centre developers and investors have started their operations in the country.

Prominent among them are South Africa's Old Mutual Property Investments, UK's Liberty International, Israel's Plaza Centres NV, Metro Junction and Future Group's Kshitij have announced plans so far.

Last week, Mukesh Ambani's Reliance Industries [Get Quote] formed a $500-million joint venture with US-based Vornado Realty Trust to invest and develop RIL's malls.

Though the share of organised retail is miniscule at present, analysts are worried about the oversupply of retail space amidst the slowdown in consumer spending due to inflation.

"The situation of oversupply and saturation resulting in subsequent correction of rentals may occur in certain pockets and micro-markets in the short to medium term,'' said a CB Richard Ellis report says.

"With organised retail accounting for less than 10 per cent of retail sales, we see great potential for shopping centres that are well planned, have a strong mix of brands, services and entertainment," said McArthur.