Between January and September 2023, around 35 prominent domestic and international retail brands expanded their presence into 14 tier-II cities, including Chandigarh, Jaipur, Mangalore, Lucknow, Patna, Ranchi, Vizag, Mysore, and others, showcasing a growing appetite for high-street brands, states real estate consulting firm CBRE South Asia.
Data show that several domestic and international retail brands, including Croma, Armani Exchange, Malabar Gold & Diamonds, Reliance Smart, Tanishq, H&M, Marks & Spencer, GAP, Starbucks, Pizza Express, and Under Armour, among others, have expanded their retail footprint to tier-II cities in this period.
Factors such as the e-commerce boom, tech-savvy consumer base, growing aspirations and surge in discretionary purchasing are defining retail growth in tier-II cities, said Anshuman Magazine, Chairman and CEO, India, Southeast Asia, the Middle East & Africa, CBRE.
Demand drivers
According to the report, the total retail stock in these 14 tier-II cities stood at 29 million sq ft. as of September 2023, with Jaipur, Lucknow, and Chandigarh each boasting retail stock ranging between 3 to 7 million sq ft. The retail development in these cities has been a healthy mix of high streets and malls.
Moreover, the total retail supply recorded in these 14 cities has been 2.4 million sq ft during this period. The top cities dominating supply addition during this period include Chandigarh, Jaipur and Lucknow. While the total absorption across the 14 cities stood at 2.4 million sq ft during this period, led by Kochi, Jaipur and Goa.
“Most non-metropolitan cities are established trade and business hubs and are now witnessing multinational corporations and start-ups setting up offices as well. The growing population in tier-II cities is further propelling demand for a diverse range of retail offerings,” Magazine added.
The last three years have seen a massive surge in retail investments across tier-II cities. “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, fuelled by a well-aware and well-travelled consumer set,” noted Ram Chandnani, Managing Director, Advisory and Transactions Services, CBRE India.