News: RIL retail foray to create 0 to 100m sqft in 3 yrs
(TNN 30/06/2006) Mumbai - Mukesh Ambani’s announcement of a Rs 25,000-crore war chest for Reliance Industries’ retail foray may have set the cat among the pigeons. But that isn’t the only mind-boggling statistic which reflects the size of Reliance’s mega ambitions.
ETIG estimates that Reliance will set up nearly 100m square feet of space by ‘10 — the size of nearly 465 football fields. So, if Pantaloon takes 16 years to reach 30m sq ft by ‘10, Reliance aims to reach more than three times that size in the next three years.
Yet, most property consultants expect that the total retail space which will be available in the market by ‘10 may not be more than 100m sq ft. So, the moot point: is there enough available land for the Reliance group to keep its scale up plans on course?
Clearly, the odds are stacked against it. For one, Pantaloon, which currently has retail space of 3.1m sq feet, plans to edge up to 30m by the end of ‘10. Out of the 300-odd malls under development in the next three years, Pantaloon has signed up with 100 of them.
So, with nearly 33% of the total retail space already blocked out, Reliance will also have to contend with other rivals like Shoppers’ Stop, Lifestyle, Trent, RPG Group and Metro. Given just how scarce prime retail property is likely to be, it is unlikely that any of them will shy away from a dogfight.
Reliance has announced plans to launch its foray in the Tier II towns, before it enters the metros. On the face of it, it seems a sensible strategy, given that large parcels of land ought to be more easily available in the smaller towns than it is in metros.
Here too, it is likely to run smack into Pantaloon. After having built its presence in the metros, Pantaloon is now consciously expanding into the Tier II towns.
For instance, in Ahmedabad, Surat and Baroda, where Reliance is likely to hit first, Pantaloon expects to have nearly 4 lakh sq ft of retail space by ‘08.
Therefore, a huge war for retail property is clearly on the cards, according to experts. A recent JM Morgan Stanley report suggests that rentals have increased by 80-100% over the last one year.
So, while Pantaloon has already signed up some of the best locations at reasonably attractive rates of about Rs 45 per sq ft, Reliance will now have to up the ante to stay in the hunt. Yet, at the same time, it can’t afford not to rein in real estate costs.
ETIG estimates that Reliance will set up nearly 100m square feet of space by ‘10 — the size of nearly 465 football fields. So, if Pantaloon takes 16 years to reach 30m sq ft by ‘10, Reliance aims to reach more than three times that size in the next three years.
Yet, most property consultants expect that the total retail space which will be available in the market by ‘10 may not be more than 100m sq ft. So, the moot point: is there enough available land for the Reliance group to keep its scale up plans on course?
Clearly, the odds are stacked against it. For one, Pantaloon, which currently has retail space of 3.1m sq feet, plans to edge up to 30m by the end of ‘10. Out of the 300-odd malls under development in the next three years, Pantaloon has signed up with 100 of them.
So, with nearly 33% of the total retail space already blocked out, Reliance will also have to contend with other rivals like Shoppers’ Stop, Lifestyle, Trent, RPG Group and Metro. Given just how scarce prime retail property is likely to be, it is unlikely that any of them will shy away from a dogfight.
Reliance has announced plans to launch its foray in the Tier II towns, before it enters the metros. On the face of it, it seems a sensible strategy, given that large parcels of land ought to be more easily available in the smaller towns than it is in metros.
Here too, it is likely to run smack into Pantaloon. After having built its presence in the metros, Pantaloon is now consciously expanding into the Tier II towns.
For instance, in Ahmedabad, Surat and Baroda, where Reliance is likely to hit first, Pantaloon expects to have nearly 4 lakh sq ft of retail space by ‘08.
Therefore, a huge war for retail property is clearly on the cards, according to experts. A recent JM Morgan Stanley report suggests that rentals have increased by 80-100% over the last one year.
So, while Pantaloon has already signed up some of the best locations at reasonably attractive rates of about Rs 45 per sq ft, Reliance will now have to up the ante to stay in the hunt. Yet, at the same time, it can’t afford not to rein in real estate costs.
posted by InCar Group Press Room at 19:23
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