Investments in retail real estate in tier II and tier III cities has increased and the momentum gained exceeds that in the metros, according to property consultant firm JLL India.
"With retail assets becoming more lucrative, thanks to the impending launch of real estate investment trusts(REITs), the period between 2015 and Q3 2017 saw an astonishing 54 per cent of over USD 1.57 billion investments in retail real estate happening in tier II and III cities, well exceeding those in the metros," JLL India MD, retail services, Pankaj Renjhen said in a statement.
The investments have mostly been done as entity-level deals, platform deals or acquisition of stakes in malls. Some of the global private equity funds have been investing in the retail real estate sector to diversify their investment portfolios in India, Renjhen said.
Apart from Mumbai, investment largely took place in cities such as Pune, Bangalore, Amritsar, Indore, Ahmedabad and Chandigarh, the firm said.
Investment by PE funds in retail real estate assets is also expected to bring a structured approach to leasing, leading to a more regular performance evaluation of brands within malls, it said. With retail assets becoming a part of the REIT portfolio, options for exits open up that enhance the liquidity of such retail assets, JLL said.