Retail, logistics among real estate drivers

The Union Cabinet's decision to allow international brands to set up retail chains with a majority stake could stir up the real estate sector.

"The decision to allow global brands will further increase the confidence of foreign investors to invest in India and will also step up the pace of opening up the retail sector further," said Anshuman Magazine, managing director, CB Richard Ellis-South Asia.

Any expansion in the retail industry is expected to have a multiplier effect on the economy in general and on real estate in particular.

Over the next five years it will be driven by retail sector along with logistics and warehousing sectors. This is different from the present scenario where the real estate sector is primarily fuelled by knowledge sector i.e. IT, BPO and call centres.

As the country integrates into the global economy, it will attract investments in the logistics and warehousing sectors that are presently unorganised.

As private the participation grows, the government will withdraw into the background, only playing the role of a facilitator, said Manisha Grover of Jones Lang Lasalle, an international real estate consultancy company.

In Bangalore, with the international airport coming up at Devanahalli, the property market in the north of the city is likely to witness hectic activity and is likely to industrialise the districts of Kolar, Tumkur and Hassan.

In the next five years, Mysore is set to come closer to Bangalore with the doubling of the railway track, expressway and more townships coming up between the two cities.

In the short term, the real estate market seems to be in a clear revival mood. Based on the present latent demand in the market, it seems likely that the first half of 2006 will witness fresh lease commitments in excess of three million square feet in Bangalore. This may result in the entire 2006 witnessing a total lease commitments in the region of 5.5-6 million square feet, says a Cushman and Wakefield report.