Indian consumers’ preferences have been constantly evolving as a result of growth in per capita income, rapid urbanization and a burgeoning and well-travelled middle class. A noticeable change in consumer demand for a greater variety of products and services is evident from the changing consumption patterns that have generated immense interest among international brands and retailers. As per Cushman and Wakefield research, the size of the overall retail market in India is set to reach USD 1.0 trillion by 2020.

The Indian government has taken several steps to boost the growth of the retail sector with 100% foreign direct investment (FDI) in single brand retail and allowing 51% FDI in multi-brand retail that has met with varying degrees of success, as some states viewed it cautiously while others such as Maharashtra, Haryana and Uttarakhand welcomed the move. Organized retail has been gaining importance across all segments and as per Cushman and Wakefield research, it will attain a 10.2% share by 2016-17 from a current 7% of the total retail market in India. Recently, during the Union Budget 2015-16, the central government announced the enactment of the much-awaited Goods and Services Tax (GST) from next fiscal year, which is a positive move for the retail sector as it will introduce a uniform regime of indirect taxes and ensure price parity in the country.

Total existing stock of shopping centres in India is estimated to be approximately 70 million square feet (msf) across the top eight cities1 as of March 2015 with an overall vacancy rate of 15%. Most of these developments range between 200,000 and 550,000 square feet (sf). Currently, the Indian retail market is undergoing a metamorphosis with established shopping centres and main streets becoming more sophisticated, and with emergence of a number of new locations.

Whilst the penetration of organized retail is growing in India, e-commerce is fast gaining acceptance and its share is steadily increasing. It is a great opportunity for retailers to move towards an omni-channel approach, integrating online channels with brick and mortar stores to provide an unparalleled and unique shopping experience.

ECONOMIC INDICATORS*20142015F2016F2017F2018F
GDP growth
Private Consumption Growth5.
Industrial production
Unemployment rate (%) at year end
Inflation (WPI)
INR/€ (average) 0.01230.01430.01440.01400.0133
INR/US$ (average) 0.01640.01590.01540.01490.0145
Interest rates 10-year (%)

NOTE: *All data is for financial year unless otherwise indicated. E-Estimate F-Forecast

Source: Department of Industrial Policy & Promotion, Ministry of Statistics and Programme Implementation, Reserve Bank of India, Oxford Economics

Population1.26 BILLION (2014F)
GDP7.4% (2013-14)
Foreign Exchange Reserves (USD Billion)352.13
Parliament BJP
PresidentPranab Mukherjee
Prime MinisterMr. Narendra Modi
Election date May 2019

NCT of Delhi (NCR) 16,314,838
India - Largest Cities

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NCR : 28.480358, 77.527546
Mumbai: 19.095294, 72.874632
Pune: 18.520430, 73.856744
Bengaluru: 12.971599, 77.594563
Kolkata: 22.601240, 88.384516
Chennai: 13.060422, 80.249583
Ahmedabad: 23.039568, 72.566004
Hyderabad: 17.385044, 78.486671

Major Domestic Food Retailers

Big Bazaar, Spencers, Nilgiris, More, Max, Reliance Mart, Star Bazar

Major Domestic Non-Food Retailers

Madura, Shoppers Stop, Westside, Reliance Trends, Titan

International Retailers in India (a selection)

Mango, Zara, Ed Hardy, Marks & Spencer, Debenhams, Diesel, Timberland, Guess, Sephora, etc.

Food & Beverage Operators

Burger King, Starbucks, The Coffee Bean & Tea Leaf, Krispy Kreme, Dunkin’ Donuts, Pita Pit, Hard Rock Café, Costa Coffee, McDonalds, Pizza Hut, Nirulas, Haldirams, Bikanerwala, Slice of Italy, Nandos, KFC, etc.

High Streets10.00-20.0010.00-20.0010.00-20.00
Shopping Centers10.00-10.0010.00-11.0010.00-11.00

India is one of Asia’s largest markets with a population of 1.2 billion. The rising middle class is well-travelled and influenced by changing global environments that is, in turn, reshaping their consumption patterns and priorities. As a result, organized retail is also gaining importance, as evident from the increasing presence of the brands and retailers across all segments.
Total existing stock of shopping centers in India is estimated to be approximately 70 million square feet across the 8 biggest cities as of March 2015. Most of these developments range 150,000 to 200,000 square feet in size.

E-commerce is fast gaining momentum in India. With over 150 million internet users in the country, as estimated by First Data Corporation and ICICI Merchant Services, e-commerce is rapidly gaining acceptance as purchases are increasingly being made online. The entry of players in this domain has been on the rise since the last few years.
With the recent regulation allowing 100% FDI in single-brand retail, an additional route for international retailers to enter the Indian retail market has opened. Thus far, they were restricted to only franchise or joint venture options.

Phoenix Market City Mumbai 1,06,838 2011
Lulu Centre Kochi 97,084 2013
Ambience Mall Gurgaon 95,690 2007
R City Mall Mumbai 93,553 2011
Mantri Square Bangalore 85,471 2012
Express Avenue Chennai 83,613 2010
Highstreet Phoenix Mumbai 78,000 2009
Brigade Orion Bangalore 74,000 2012

New Entrants to the Market


Lease TermsTraditionally, leases in India have been for a term of 5-9 years and could be higher, with 35 years often seen in parts of the retail market (e.g. for an anchor tenant). Leases are now more typically for 9 years. Break options were rare in the past but now increasingly negotiable. Typically the retailer will have to lock itself for a period of 3 years The authorised use will depend on the terms of the lease. Many states have also introduced Leave & License (L&L). L&L gives the occupier only the right to operate from the premises and does not give them any tenancy rights. Under L&L, landlords always remain in possession of the premises and the occupier only has the license to operate from the space occupied.
Rental PaymentRents are typically payable a month in advance. A security deposit is normally required for a tenant with a strong covenant and, in some cases even a parent company guarantee is required. (or less frequently a bank guarantee). The retailer pays a deposit of 6 months’ rent equivalent commonplace.
Rent ReviewIndexation is not common practice but is being seen on an increasing basis, together with fixed uplifts and can be particularly prevalent in the supermarket sector. The basis of rental review open market rental value (upward only even where rents generally have decreased) usually every 5 years. This is done typically when the retailer cannot sustain the rentals, and the landlord had built as per requirement of the retailer.
Service Charges, Repairs and Insurance A service charge is usually payable in multi-tenanted buildings and covers management fees, security, cleaning, landscaping, internal maintenance of common parts, external maintenance and insurance, servicing of elevators, water, heating, air conditioning, management fees and property taxes. It excludes internal maintenance and insurance of rented accommodation, utility charges and VAT. The landlord is responsible for external /structural matters in shopping centres (charged back via service charge) or tenant (except in multi-let buildings). The tenant is responsible for internal matters. The landlord usually insures the main structure and external fabric but will charge this back to the tenant. Insurance for common parts is also paid by the landlord and charged back. The tenant usually pays for internal insurance directly.
Property Taxes and other costs The local government authority charge the "rates," the local property tax, which is payable on commercial property in most cases is paid by the developer, but in many cases the developer transfers this payment to the occupier. In some cases the initial amount is paid by the developer and any future increase is paid by the occupier.
Disposal of a LeaseSub-letting is usually possible under the terms of the lease, subject to landlord’s approval. Assignment rights are not normally barred in the lease but will also be subject to consent, which should not be unreasonably withheld. Early termination is only by break clause, to be negotiated at outset of lease by mutual consent upon negotiation. At lease end, the tenant is responsible for re-instating the premises to the same condition as at the start of the lease, subject to normal wear and tear. All tenant improvements must be approved by the landlord subject to the alteration covenant in the lease and the fact that approval should not be unreasonably withheld.
Valuation MethodsShops are valued on a sales comparable approach. Here, the shop is compared to the other similar shops in the vicinity and relevant premium/ discount is applied on various attributes to arrive at the value of the shop. These attributes include the shop frontage, accessibility, visibility, the profile of the neighbouring shops, unit size and floor, and other such parameters. The percentage of premium/ discount applicable would vary depending on the local market dynamics and the location of the shop (high street or shopping center).
LegislationLeases must be in writing and the lease document forms the standard documentation required. A mandatory standard form of lease does not exist although a market standard is in place. All leases should be registered for it be recognized under the law.

India Contacts

Nandini Taneja Bhatia

Associate Director, Retail Services
Direct:   + (91) 124 469 5567
Mobile:  + (91) 97173 97735