Israeli-owned property company Plaza Centers said on Monday it would invest Rs 5,000 crore (about $1.2 billion) over the next five to seven years to build as many as 50 shopping malls and multiplexes in the country.
Plaza Centers, a subsidiary of Elbit Medical Imaging Ltd, will tie up with local developers for these projects, some of which are already underway, said Abraham Goren, executive vice-chairman, Elbit Medical Imaging Ltd.
"We have been very active in central and eastern Europe over the past decade, and when we started thinking about where else we wanted to be, we thought of India," Goren told a news conference. "A lot of retail brands have taken birth in our eastern European malls. We want to replicate our success in the country."
the company has undertaken projects for such international retail majors as Tesco, Carrefour, Zara and Boss.
Plaza Centers has started construction of a mall (about 5 lakh sq ft) in Koregaon Park, Pune, and has planned a bigger one (about 1 million sq ft) at Karadi also in Pune.
It has picked sites also in Kochi, Hyderabad, Bangalore, Chennai, Thiruvananthapuram and some other cities.
Plaza Centers would focus on south India first and move later into the north and other markets.
"We have decided not to move into Mumbai and Delhi initially due to high realty costs. Rather we will concentrate on tier-I, II and III cities," Goren said.
India's retail market is estimated at $340 billion and the share of organised retail is about 4 per cent. Brokerage firm CLSA estimates that organised retail will have a 11 per cent share of the total retail market in the next five years.
But the expansion of large Indian companies and foreign firms into retail has led to protests by traders, farmers and small shop owners who fear massive losses.
The protests were a natural reaction to change, Goren said.
"India's not the first to see protests against retail," he said. "Everywhere, retail goes through a process of evolution, and everywhere, human nature is the same. It is natural when there is a change from one system to another," Goren said.
According to industry estimates, about 560 malls are planned across India over the next three years.
However, business has not been without its problems. A senior executive with an international property developer said that of about 120 malls operating in the country, only 10 or 12 were doing well.
"International developers with global expertise tend to do well as compared with local developers who lack domain knowledge. There is a huge scope for good mall developers in the country," he said.
Shubhranshu Pani, president, retail services, Plaza Centers, believes that increased retail activity, which is growing at 35 per cent annually, will fuel demand for malls.
"There will be a huge demand for malls going forward. The retail space per individual in the country is way below the international standards. Moreover, retail has not reached all the tier-II cities in the country. There is an opportunity to tap that," Pani said.
