Mumbai: It's time for Tier-II cities to shine now and emerge as the new growth centres in India. Nearly 35 major domestic and international retail brands like Nike, Zara, Skechers and Adidas entered 14 tier-II cities including Chandigarh, Jaipur and Lucknow between January-September 2023.
These are the latest findings of a report -Tier-II Cities: The Time to Shine released by CBRE South Asia Pvt Ltd, a leading real estate consulting firm on Tuesday. The 14 cities include Chandigarh, Jaipur, Indore, Goa, Mangalore, Kochi, Lucknow, Patna, Ranchi, Guwahati, Bhubaneshwar, Vizag, Mysore, and Coimbatore.
List Of Major Brands Entering Tier-II Cities
As per the report, several domestic and international retail brands, including Croma, Armani Exchange, Malabar Gold & Diamonds, Reliance Smart, Tanishq, H&M, Marks & Spencer, GAP, Starbucks, Pizza Express, Under Armour, among others, have expanded their retail footprint to tier-II cities in Jan-Sep’23 period.
Ram Chandnani, Managing Director, Advisory and Transactions Services, CBRE India says “Tier-II cities have recorded a massive surge in retail developments over the last three years. India’s first retail REIT has encouraged developers to aggregate and upgrade their existing facilities, apart from developing new malls. Moreover, domestic and international fashion brands are looking to expand in non-metro cities, fueled by a well-aware and well-travelled consumer set.”
According to the report, the total retail stock in these 14 tier-II cities stood at 29 mn. sq. ft. as of Sep’23, with Jaipur, Lucknow, and Chandigarh each boasting retail stock ranging between 3 to 7 mn. sq. ft.
The retail development in these cities has been a healthy mix of high streets and malls. The total retail supply recorded in these 14 cities has been ~2.4 mn. sq. ft. during Jul-Sep ’23.
Top cities dominating supply addition during this period include Chandigarh, Jaipur and Lucknow. The total absorption across the 14 cities stood at 2.4 mn sq. ft. in Jul-Sep’23 period, led by Kochi, Jaipur, and Goa.
According to Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, “the E-commerce boom, tech-savvy consumer base, growing aspirations and surge in discretionary purchasing are defining the retail growth in tier-II cities. Investment-grade developers are setting up large-sized contemporary malls in these cities, which are seen as an entertainment destination and not just as a place to shop. Most non-metro cities are established trade and business hubs and are now witnessing multinational corporations and start-ups setting up offices as well. Growing population in tier-II cities are further propelling demand for a diverse range of retail offerings.”
Chandigarh Among Favourite Cities For Major Brands
Owing to the presence of an affluent consumer base, well-planned infrastructure, economic growth, tourism, and the presence of domestic and international retail brands, Chandigarh has grown to become a prominent retail market in Punjab, the report says.
Key brands present in the city include Zara, Uniqlo, Lifestyle, Shoppers Stop, Marks & Spencer, The Collective, Nike, Adidas, Skechers, Puma, Frontier Raas, Taco Bell, Ritu Kumar among others. HLP Galleria, Jubliee Junction, Central Street, Mohali Citi Center are some of the major upcoming developments in the city.
On the other hand, lower operating costs, a good talent pool, and proximity to Delhi-NCR have led to Jaipur becoming a prominent business hub. The city also houses an international airport and an air cargo complex, making it a reliable destination for facilitating exports.
The report adds Lucknow retail real estate market is seeing robust growth driven by factors such as rapid urbanization and a growing middle class, increasing consumer spending, the emergence of new shopping malls and high-street retail formats and expansion of domestic and international retail brands.
