Retail FDI is expected to help the mall owners to find takers. With the government’s decision to have more Foreign Direct Investment, India has opened the gates to the foreigners. As a result foreigners are now free to run shops in India. This created hopes in the minds of mall owners.
Sluggishness existing in the real estate sector left many mall owners with higher amount of vacant office. Most of them do not find any takers for their malls.
Lok Sabha recently approved the bill to have more retail FDI (Foreign Direct Investment). In fact it has given rays of hope to the mall owners. They believe that they will find some foreigners to raise demand for his vacant space.
Shopping-mall development boom led to a situation where the retail space has become available in excess. There is excess retail space available in all the major cities of India. The situations of Mumbai or Delhi are nothing different. This has put the mall owners into a pathetic situation as a major part of their shopping malls remain vacant.
It is believed that the more retail FDI will help the mall owners in Metropolitans. Yet there is not much hope for the mall owners in the small cities or tier 2 or 3 cities. Foreigners will seldom be interested to run their shops in such cities.
Prior to retail FDI bill, foreign companies were permitted to have maximum shares of 51%. This is in the case of stores which sell multi- products. This has been creating a severe trouble for the foreign companies. They were to find a suitable native partner to run the business. Finding a good and strong partnership was troublesome.
With the new retail FDI bill the foreigners can run shop without the partnership of any Indian businessman. They can fully own and run the shops in India.
Sluggish real estate market is anyway the sole reason for vacant shopping malls. The success of any shopping malls depends on its facilities to eat and drink. Good hotels as well as provision for multiplex are necessary. Real estate analysts say these are highly necessary to bring the customers back.
Knight Frank, real estate consultant firm, reports that only the malls in metros might be helped by the retail FDI. Anyway, retail FDI is welcomed by the business class people cordially. Foreigners’ longer queue fills the minds of shopping mall owners with hope.
