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Sep, 10 2010

Metros in the making

Gearing to compete with the metros, B and C-class towns are the new growth centres of resurgent India.

Gearing to compete with the metros, B and C-class towns are the new growth centres of resurgent India. Nearly 35 Indian cities with a million-plus population are proving to be as lucrative a market as the A-class towns or the metros. A sneak peek into the top 10 volcanic cities ready to explode into potential retail markets.

THE easy availability of space, low rentals, moderate marketing cost and high consumer demand has up the ante for B and C-class towns. They are being piped as the next metros. One way of looking at the captivation of these towns is from 'it-had-to-happen' perspective. Since, there is a lot of pent-up demand and high aspirations in these towns, the arrival of consumer brands is helping to fulfil these aspirations of burgeoning affluent class in smaller towns and cities and has also opened up new markets for entrepreneurs.

As retailers and developers foray into emerging and growing markets to capitalise on the opportunities that they present, we looked at the growth characteristics that are conducive from the perspective of retail emergence and expansion, Our analysis found that the demand was skewed in certain Indian states that included Rajasthan, Madhya Pradesh, Andhra Pradesh, Karnataka, Kerala, Gujarat and Tamil Nadu. To enable retailers tap the aspiring and ambitious hinterland consumer, our survey explored 10 B and C*-class towns that represent new geographies of opportunity. These metros in the making are on retailers' high radar and have also been picked up by the Indian government for their urban development scheme, JNNURM (Jawaharlal Nehru National Urban Renewal Mission).

B-class towns at the threshold

Coimbatore

Coimbatore, the Manchester of South India, is strategically located with an average travel time of eight hours from main commercial destinations Chennai and Bengaluru. It is the largest industrial centre after Chennai in Tamil Nadu. The IT industry is in its nascent stage but set for an upswing.

Retail market: People here have a strong entrepreneurial spirit that has resulted in availability of capital. The growth has taken a paradigm shift towards metropolitan culture and as a result, the demand for real estate grew over the years. The traditional shopping avenues are Oppanakara, Cross Cut Road and D.B. Road. However, lately, there has been additions with areas like Avinashi Road, Trichy Road and the Metupalayam Road. The presence of an upmarket populace in vicinity of these areas is an added advantage. Retail activity is also penetrating in and around affluent residential localities like the Race Course Road and R.S. Puram Road. Close to a million sq.ft of retail mall space is expected to come up by 2011.

Ramesh V., Senior Realtor with Walgreens Realty International, says, “Fancy rates are charged for commercial property in Coimbatore if the property has a good road-facing location. Sometimes, a 100 months advance is also charged. Business is slow and steady and no downside trend can be foreseen at the moment.”

Indore

Indore is the commercial capital of Madhya Pradesh and the centre of business trading activities in Central India. Fast-paced infrastructural development is being witnessed in the city, with the state and local governments undertaking several initiatives to promote Indore as a premier investment destination.

Retail market: M.G. Road has always been the retail hub and is an elite shopping area. But with the retail activity expanding, retail outlets and malls have also come up on the A.B. Road. A significant amount of retail activity is occurring in the central and eastern parts, close to high-end residential locations of Palasia, Race Course, Saket, Gulmohar and the upcoming locations of Vijay Nagar, MR 10 and Indore Bypass. Vikas Lohia, an Indore realtor, says, “Indore is well connected with main cities now, thanks to the state government's initiatives. Industrial development has happened in the city.”

Amit Kumar, Senior Vice-President, Century 21, says, “Sapna Sangita road is an upcoming high street area with lot of potential and value for money.”

Jaipur

Jaipur, the capital city of Rajasthan, is a major tourist destination as part of India's golden triangle tourist circuit. It is in proximity of Delhi and Gurgaon that further fuels the tourism and retail activity in Jaipur.

Retail market: The M.I. Road and Sansar Chander Road have become fully commercialised for retail and wholesale trade. Jaipur is also the first city in Rajasthan to have multiplexes and shopping malls. Shopping mall-cum-multiplexes covering around 8 lakh sq.ft are operational at various locations with another 15 malls in different developing or planning stages. Malls currently operational include MGF Metropolitan, Mall 21, Crystal Palm, Silver Square, etc.

MGF Metropolitan Mall’s Assistant Manager, (MARCOM) Aakash Wagle says, “The commercial property is doing very well and the future of the real estate sector in Jaipur is very bright.”

Kochi

Kochi, also known as Cochin, is the commercial capital of Kerala and a significant port city of India. It has gained popularity due to its medical and eco-tourism. There has been a boom in its local IT sector, the combined effect of which has been that Kochi has emerged as an important investment destination of South India.

Retail market: Retail activity is concentrated on central high street, M.G. Road, which is the retail corridor of merchants dealing in gold, textiles and various other items. However, areas such as Marine Drive, Vytilla Junction, Palarivattam and Edapally have been attracting attention lately. The North-South National highway 47 bypass is being transformed into a mall corridor with one operational mall and six more malls in various stages of development.

Surat

Surat, renowned for its textile manufacturing and diamond-cutting industries, is the major industrial hub of Gujarat. Industrialisation has not only boosted the local real estate market but has also drawn an influx of migrants from neighbouring cities.

Retail market: The retail concentration is in Dumas Road, Parle Point, Ghoddod Road, Piplod and Ring Road. Lately, owing to excellent road connectivity and retail mall development in outlying areas such as Vesu, Varachha Road and near Udhana Navasi Road, they are gaining prominence too. The existing retail space is approximately 6 lakh sq.ft and about 5.6 lakh sq.ft is to be further added with the coming up of three to four malls, which are in the planning stage.

Vijayawada

Vijaywada, the third largest city in Andhra Pradesh, is agog with commercial activity powered by strong educational infrastructure and IT industrial base.

Retail market: Retail has traditionally been concentrated along Shivalayam Street and Samarangam Chowk, which form the older part of the city. Alternative, modern forms of retail business have started appearing along Mahatma Gandhi (MG) Road (erstwhile Bandar road), Besant Road and to an extent, along Karl Marx Road (erstwhile Eluru Road). Many organised retail projects are already under construction along Mahatma Gandhi Road, old bus stand area and Gandhinagar.

Jagan Mohan, President, Corporate Properties said, “The people in Vijayawada are financially sound, however, the spending habits are traditional. With the advent of IT the spending patterns are changing.” Realtor Vijay Sarathi observes, “The demand for retail space in Vijaywada is more than the city can offer, which puts a pressure on the supply.”

Top C-class towns to look out for

Dehradun

Dehradun, the capital of Uttarakhand, is one of the oldest cities of India. Commercial and residential properties are in demand, as tourists are looking for a holiday home in Dehradun. Education sector is also providing the required thrust with some premier educational and training institutes being present in the city.

Retail market: The main high street of Dehradun is the Rajpur road, which extends to about 6 kms and offers nice shopping experience with the presence of many fashion brands, coffee shops and eateries. However, congestion rules during peak hours and traffic jams are frequent. The government has not done much about the roads throughout the city, which is unable to accommodate the growing number of vehicles. A retail mall by Parsavnath is in its final stage and would be the first one in the city.

The realty prices in Dehradun are an all-time high now, says Hemanth Kochar, a realtor and hotelier from the city. Further adds, “Being a seismic zone, Dehradun does not have the option to expand vertically and the government ruling on farmland did not allow it to expand horizontally. The real estate in Dehradun is bound to grow. An investment of a crore in a commercial area would touch Rs 1.5 crore in a year's time.”

Mangalore

Mangalore is a naturally rich city. It has a port-based economy and is the only port in Karnataka. With the emergence of IT, due to its proximity to Bengaluru, Mangalore is now being seen as the next destination of IT and IT-enabled Services (ITeS) companies.

Retail market: The main growth corridor for retail and commercial development is M.G. Road. The retail activity is also expanding on K.S. Rao Road. There are few malls that have come up and many more are in various stages of planning and development. Mangalore-based realtor Jacob J.M. feels, “Real estate in Mangalore has bright prospects with education and IT sectors gaining ground. With money coming from the Gulf; retail will grow at an exponential rate.”

Raipur

Raipur is the capital city of young state of Chattisgarh. An IT park, a township with a golf course, a capitol complex and a five-star hotel will be developed here. Chattisgarh has also attracted considerable foreign direct investment for power generation plant. The state government has taken initiatives to promote Chattisgarh as a tourist destination and announced tax incentives and other sops for the private sector in the hospitality sector.

Retail market: The traditional markets are located in the centre of the city with newly emerging retail areas along the Grand Eastern Road (NH-6). The stretch between Tati Bandh to Teli Bandha has emerged as the most active retail destination in the recent years whereas Sharda Chowk and Jaistambh Chowk are noteworthy markets in the city. Raipur got its first shopping mall, City Mall 36, last year and there are three additional malls which are in the advanced stages of development.

Udaipur

The lake city, Udaipur is a popular tourist destination in India. Retail markets have been an integral part of the city.

Retail market: Retail high streets in Udaipur are Bapu Bazaar, Chetak Circle, Suraj Pole, Ashwini Bazaar, Nehru Bazaar, Bada Bazaar, Shastri Circle, Delhi Gate, Sindhi Bazaar, Town Hall and Chand Pole. These are complimented by specialised high streets at Ghantaghar, Malda Estate and Hathi Pole. Organised retail is widespread throughout Udaipur with Durga Nursery Road, Shakti Nagar and Sukhadia Circle having the largest concentration of new entrants. The Celebration Mall along the NH-8 in Udaipur would be the first mall in the lake city.

Sanjay Sachdeva, President (Corporate Strategy and Business Development), Advance India Projects Limited, shares, “Udaipur is a small town. Hence, the whole city is a catchment area with a huge market and people from surrounding areas coming to shop in the city.”

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