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More than 300 new malls are going to be operational by 2006

Gurgaon, India
Ramesh Agarwal

India is experiencing a revolution in the retail market. The organised retail market, which is just 3 per cent of the overall retail market, is expected to grow from Rs 28,000 crore to Rs 1,00,000 crore business by 2010 as per an Images-Technopak research report.

Around 300 new malls are going to be operational by 2006. The National Capital Region is likely to see 75 malls coming up by 2007. The mall mania is spreading from metros to smaller cities with population between 30 lakh and 50 lakh.

The majority in the market believe that most of the shopping malls are likely to suffer from huge losses and those without deep pockets might shut down in the long run. An average 75,000-150,000 sq ft mall requires an investment of Rs 40 crore-Rs 75 crore. And as per estimates, it takes 3-4 years to achieve breakeven.

According to an industry expert, the problem lies with the management of these malls as he says, "In India most of the malls are developed by real estate companies which sell the space at very high rates to book instant profits. They don't have the expertise to run a mall on professional lines with a long term vision. Majority of the malls in India are not planned and marketed properly."

In India, most of the shop owners in malls complain that majority of the visitors just uses the ambience to pass their time. The conversion rate ranges between 10 per cent and 20 per cent only.

In India, on an average, on a busy weekday, a mall in a prime location attracts 10,000 to 15,000 foot falls which goes up by 75-100 per cent over the weekend. Compare this figure with China where a good mall gets 600,000 footfalls in a day!

In the US, the malls are managed by companies which specialise in mall management. You might find a number of companies there which manage even 300 malls also. The builders don't own or run the malls. That's the reason why 60-70 per cent of the US retail market belongs to the organised sector

The industry will cross the Rs 35,000-crore mark by next year itself. The projected growth rate for organised retail is 25-30 per cent.

NRI real-estate, large builders and developers, who are investing in mall projects, now little worried about this trend of fast decvelopment.

(Source: Infoindiagurgoan)

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