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Francast Report 2019-11-20

These Indian Cities are Driving Massive Growth in Franchised Businesses

With India set to become the third-largest consumer market, consumer spending in India is expected to grow from USD 1.5 trillion at present to nearly USD 6 trillion by 2030. Here are the 10 most active franchise markets in India.

These Indian Cities are Driving Massive Growth in Franchised Businesses

India has started emanating confidence among franchise investors. The overall scenario is that there is an ever-rising consumption, preference for branded products, and high inclination to spend on international brands that are driving massive growth in demand for franchised businesses in India. Here are the top 10 cities with large franchise potential:

Delhi-NCR

Delhi-NCR is India’s largest and one of the world’s largest urban agglomeration with a population of over 4.7 crore as per the census of 2011. The huge employment opportunities offered by Delhi as well as Gurgaon, Noida and Faridabad account for highly diverse demographics and people with high disposable income. An agglomeration of the region contributes about 7.5% to India’s GDP. Delhi-NCR retail real estate market witnessed healthy transaction in the year 2018 with total leasing of 1.5 million sq. feet. Apparel and lifestyle segments were the predominant demand drivers.

Robust demand and limited availability led to rental appreciation by 3-5% on main street locations. The retail markets of Delhi-NCR are expected to witness sustained demand for quality retail space in 2019.

HOT LOCATIONS

Malls:

- DLF Mall of India

- Great India Place

- Select Citywalk

- Ambience Mall

- DLF Promenade

High streets:

- Khan Market

- South Extension I and II

- Connaught Place

- Kamla Nagar

- Lajpat Nagar

- Sector 18 Noida

- Sector 29 Gurgaon

Rental per sq. feet per month

- Delhi: Rs 400-825

- Noida: Rs 230-385

- Gurgaon: Rs 380-710

- Ghaziabad: Rs 210

Mumbai

Mumbai is the commercial capital of India and has evolved into a global financial hub. It is also one of the world’s top 10 centres of commerce in terms of global financial flow, accounting for 6.16% of the total GDP, 25% of industrial output and 70% of maritime trade in India. The Mumbai retail real estate market witnessed supply of nearly 2 million sq. feet of leasable space. Healthy leasing activity enabled the total absorption of around 1.2 million sq. feet area. In 2019, it is expected to see sustained demand across malls, particularly at Lower Parel and the main street on Linking Road. Prominent main street locations like Bandra, Juhu and Powai will continue to see good inquiries from retailers.

HOT LOCATIONS

Malls:

- Phoenix Market City

- Inorbit Mall

- Palladium

- Oberoi Mall

High streets:

- Linking Road

- Kemps Corner

- Colaba

- Fort Fountain

- Lokhandwala

- Borivali LT Road

Rental per sq. feet per month

- High streets: Rs 125-800

- Malls: Rs 125-600

Pune

Pune is considered the cultural capital of Maharashtra and is one of the fastest growing cities in the Asia-Pacific region. It is among the evolving business centres and an established educational hub in India. Pune saw leasing of around 0.5 million sq. feet of retail space while supply remains low at only 0.2 million sq. feet. Healthy leasing activity was seen in malls such as Phoenix, The Pavillion and Amanora. Rentals remained stable in most micro markets except Pavillion and Westend Mall, which saw 13% year-on-year appreciation. Rentals are expected to grow marginally across malls in 2019-20 owing to low vacancy levels.

HOT LOCATIONS

Malls:

- Phoenix Mall

- The Pavillion

- Amanora Mall

- Seasons Mall

High streets:

- M G Road

- JM Road

- FC Road

- Koregaon Park

- Aundh

- Bund Garden Road

Rental per sq. feet per month

- High streets: Rs 140-375

- Malls: Rs 140-220

Hyderabad

Known as the city of pearls, Hyderabad is the 5th largest contributor to India’s overall GDP. A major technology hub, it is home to many upscale restaurants and shops. The city saw around 2.3 million sq. feet of retail space added in 2018 with the addition of two new malls – Sarath City Capital in Kondapur and the other in Erramanzil, supplying nearly 1.8 million sq. feet of retail space. Robust growth in office and residential markets is driving retail activity across all main streets. However, rents in all malls in the city may see short-term correction due to oversupply. Main street rents were also flat amid healthy leasing activity and sufficient availability of spaces. Vacancy levels reached 20% due to availability of supply.

Emerging retail corridors in Film Nagar, Nallagandla, Kompally, Boduppal and Pocharam have seen leasing strengthening in 2018 and are slowly transforming to major high streets.

HOT LOCATIONS

Malls:

- The Forum Sujana Mall

- Inorbit Mall

- GVK One Mall

- City Centre Mall

- Hyderabad Central Mall

High streets:

- MG Road

- SP Road

- Raj Bhavan Road

- Banjara Hills

- Jubilee Hills

- Punjagutta

Rental per sq. feet per month

- High streets: Rs 100-155

- Malls: Rs 120-155

Bengaluru

With an economic growth of 10.3%, Bengaluru is the second-fastest growing major metropolis in India. Bengaluru saw a revival of retail demand in 2017 with the absorption of around 1 million sq. feet of prime retail space. Around 1.8 million sq. feet of new retail space was added in 2018. Additionally, a healthy supply of over 3.88 million sq. feet is expected by the end of 2020. The majority of leasing activity in the malls was driven by e-commerce, food and beverage and apparel retailers. Hosur-Sarjapur Road has emerged as the new retail destination and has gained significant interest from retailers, witnessing high volume of transactions. The rentals have remained stable in all major micro-markets.

HOT LOCATIONS

Malls:

- RMZ Galleria Mall

- VR Bengaluru

- Phoenix Market City

- Forum Mall

- Garuda Mall

- Mantri Square

- Orion Mall

- 1 MG Mall

- Royal Meenakshi Mall

High streets:

- MG Road

- Brigade Road

- Indiranagar

- Jayanagar

- Koramangala

- Vittal Mallya Road

Rental per sq. feet per month

- High streets: Rs 100-400

- Malls: Rs 125-400

Chennai

Known as the ‘Detroit of India’ for its automobile industry, Chennai is the fifth-largest city and fourth most populous metropolitan area in the country. Retail transactions revived in 2018 with the launch of 1 million sq. feet VR Mall in Chennai. The city saw absorption of 1.5 million sq. feet of retail space in 2018. Significant leasing activities were noted in the areas of Velachery and Mount Poonamallee Road. While rentals showed appreciation of 5-8% in retail high streets, mall rentals are likely to remain stable with new leases expected to close at prevailing rates and new malls scheduled for completion in 2019. Main street rentals are expected to remain largely stable in areas of Adyar, T Nagar, Purasawalkam and Alwarpet.

HOT LOCATIONS

Malls:

- Express Avenue Mall

- The Forum Vijaya Mall

- Chennai City Centre

- V R Chennai

- Spencer Plaza

- Skywalk Ampa

High streets:

- Nungambakkam High Road

- Khadar Nawaz Khan Road

- Cathedral Road

- Usman Road

- Anna Nagar 2nd Avenue

- Purusawakam High Road

Rental per sq. feet per month

- High streets: Rs 120-225

- Malls: Rs 180-325

Ahmedabad

Ahmedabad has emerged as an important economic and industrial hub in India. It is the second-largest producer of cotton in India which reflects in the presence of many lifestyle and apparel brands. Ahmedabad retail real estate saw healthy transaction of around 0.85 million sq. feet in 2018. High street at S G Highway witnessed robust leasing activity during the year, primarily by apparel retailers. With steady demand and limited supply in majority submarkets, the rents on the main streets of S G Highway and Prahlad Nagar increased by 5-7%.

Retail leasing at high streets remains more robust compared to malls. SG Highway and Sindhu Bhavan Road will continue to remain attractive locations for retailers.

HOT LOCATIONS

Malls:

- Alpha One Mall

- Gulmohar Mall

- Himalaya Mall

- CG Square

- Ahmedabad One Mall

- Iscon Mega Mall

High streets:

- CG Road

- SG Highway

- Ashram Road

- Law Garden

- Prahladnagar

- Vastrapur

Rental per sq. feet per month

- High streets: Rs 90-160

- Malls: Rs 80-150

 

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