Citizens' Issues
Retail boom hampered by real estate crunch

More retailers opting for standalone formats due to shortage of quality properties

A recent report on the state of retail realty by Jones Lang LaSalle says that though the retail industry is poised for a boom, shortage of quality properties may curtail its chances. So now, retailers are looking for stand alone properties.

“The last few months have seen a lot of mid-sized office and mixed-use buildings in Mumbai going under the hammer. What is so unusual about these buildings is the fact that they are going to be redeveloped into stand-alone retail formats,” said Ashutosh Limaye, head - research and real estate intelligence service.

According to Jones Lang LaSalle, 2011 saw a retail real estate supply of 13.8 million square feet hit the market, with 10.7 million square feet getting absorbed. But there is a catch. “All worthy properties are fully consumed and good properties on hand being leased within the blink of an eye. Delaying decisions by even a few days means diminished hopes of business expansion. There is simply not enough good retail space to sell their wares. It can well be imagined what the scenario will be when FDI into multi-brand retail opens up,” Mr Limaye said.

Retailers, he says, have realised that most malls have turned out to be unprofitable. The rush for constructing malls has resulted in a number of unviable projects; many of them concentrated in a select pocket; and looking like a replica of the next. “So, we have quite a few mediocre shopping centres with substandard locations in inappropriate catchments, designed experimentally and sold by strata (strata-selling mall space is like issuing a death warrant to the mall). These are ruins of hastily-commissioned projects where no retailers want to come, thus adding to the pile-up of vacant retail space in our cities. To compound this problem, there are very few new launches that can lure retailers on project merit,” Mr Limaye says.

Big retailers are now eyeing old mansions, mixed-use buildings and small office blocks in established and emerging locations. “Properties which, with retrofitting, can enable retailers to start selling in no time at all are fast becoming precious assets for big retail companies. Even constructing glass cubes on plots that house the 'building next door' is seen as preferable over having to wait for properly located and configured malls to come along,” he said.

It may also be profitable to realtors to sell away individual properties, because it is difficult to find buyers in the present scenario. “Commercial and retail sectors are seeing many distress sales~ especially by small builders,” said a builder, “because of the global economic situation, many pre-commissioned properties are now without takers. In recent times, because of strong dollar price, some NRI investments have come, but mostly for residential property; and is not of much significance.”

The retail sector is currently under a lot of pressure. Many are having trouble managing staff and operation costs, and have incurred substantial debt, especially in the lifestyle and apparel sector. Future Group’s Pantaloons has a debt of Rs 2273.12 crores, while the much troubled Koutons has Rs 806.81 crores. In the last one year, Kouton’s stock price has fallen by 70% and was trading at an abysmal Rs16.55 on 6th February. Brandhouse Retail, which is the home of Reid&Taylor, Carmichael House and Belmonte, was trading on Rs13.84 on 6th February, which is a 56% fall over one year.


Airlines in India allowed to directly import jet fuel

The decisions on direct import of aviation turbine fuel (ATF) and allowing foreign airlines to invest would go to the Union Cabinet for a final nod

New Delhi: In major initiatives to strengthen the cash-strapped aviation sector, a Group of Ministers (GoM) on Tuesday decided to allow airlines to directly import jet fuel to enable them save on high incidence of tax and permit Air India to raise Rs7,400 crore by issuing bonds or other means, reports PTI.

The GoM, headed by Finance Minister Pranab Mukherjee, was also apprised of the decision to allow foreign airlines pick up 49% stake in Indian carriers.

While the decisions on direct import of aviation turbine fuel (ATF) and allowing foreign airlines to invest would go to the Union Cabinet for a final nod, the Cabinet Committee on Economic Affairs (CCEA) would take up Air India’s financial restructuring plan for approval soon, Civil Aviation Minister Ajit Singh told reporters after the 90-minute meeting here.

“First thing is that on Air India’s financial restructuring, the GoM has taken a view. Bonds will be issued, but this will have to go to the Cabinet. Bonds, and there are other ways, GoM has more or less taken a view on this,” he said, adding that about Rs7,400 crore would be raised through these means.

On ATF imports, Mr Singh said," Airline companies will be allowed to import fuel directly for their use. This also has to go to the Cabinet. GoM has approved this. We will try to see whether some kind of credit arrangement can be made.”

The meeting was also attended by Home Minister P Chidambaram, Petroleum Minister S Jaipal Reddy, Commerce Minister Anand Sharma and Planning Commission Deputy Chairman Montek Singh Ahluwalia, apart from top officials.


Ratnakar Bank appoints Joginder Singh as COO

Joginder Singh will join Ratnakar Bank in early February and will be based in the Mumbai office

Mumbai based Ratnakar Bank has announced the appointment of Joginder Singh Rana as chief operations officer (COO). After a 22 year successful stint at Citibank, Joginder will join Ratnakar Bank in early February and will be based in the Mumbai office. He will be responsible for the Bank’s operations & administration functions and will also spearhead the Bank’s operational risk and compliance framework. Joginder is a seasoned banker and has held senior leadership roles both in Citibank India and overseas.

Ratnakar Bank has also seen additional appointments in the last couple of months including R Gurumurthy as head of corporate & institutional banking, previously heading the FI Strategic Coverage Group for Standard Chartered Bank out of Mumbai and Tajinder Kumar who has joined as the Head of Human Resources; his last corporate role was as the Human Resources Director of Asia Pacific Regional Group Technology & Operations organization of Deutsche Bank AG in Singapore.

Vishwavir Ahuja, Managing Director & CEO of Ratnakar Bank commented “I am truly delighted that these individuals have agreed to take on their respective roles. We know that they are not only a highly talented group and motivated team players but truly understand how to build a strong banking platform and lead people.

These appointments are a significant step forward in delivering our vision and underline, our commitment to the bank’s transformation. They will join a highly experienced team across India that is committed to deliver best in banking services – a culture that has been proven to benefit our clients in all regions.”


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