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Retail opportunities at transport hubs may grow to US$ 21.6 billion by 2030

IBEF:  February 27, 2020

Retail opportunities at transport hubs like airports, railways, metro, highways are expected to witness an increase to US$ 21.6 billion by 2030, according to a survey by property consultant Knight Frank.

As per the survey, this growth is supported by a healthy growth in passenger traffic as well as transport infrastructure in the country.

The report added that the diversified growth is expected in total retail opportunity across various transport hubs in India, such as airports, highways and bus stations, metro and railways, in the new decade.

 “India is going through an infrastructure revolution. The government’s focus on developing and modernising the transport modes including airports, railway stations, metro and highways is opening up unprecedented opportunities for the organised retail segment in the country,” Knight Frank India Chairman and MD, Mr Shishir Baijal said.

According to the survey, the current size of transit retail in India is estimated at US$ 2.2 billion and is expected to grow to US$ 21.6 billion by 2030.

“While the retailing potential is best tapped at airports, it is still at a nascent stage for other modes like metros, railways, highways and bus stations. A large part of the retail opportunity at transit hubs is currently untapped due to lack of retail infrastructure at these nodes,” the survey noted.

The large retail potential translates into lease rental opportunity of US$ 1 billion, which is estimated to increase to US$ 3.2 billion by 2030.

“Considering the current lease rent opportunity, the government can potentially monetise these transit-oriented retail assets to generate funding to the tune of $10 billion. Such monetisation will reduce dependencies on passenger tariffs and develop the retail eco-system for a largely unexplored territory. This will also open a new revenue stream for future infrastructure developments,” Mr Baijal said.

He further added that the public private partnership has provided many opportunities to operators and retailers in development of retail infrastructure at key transportation nodes and has monetise the potential of guaranteed footfalls with ‘wait time’.

“In India, retail real estate growth has by far been most sensitive to domestic and global conditions. With organised retail still only a fraction of the total retail market in India, which has the largest population base, there is ample scope of growth in the country,” Mr Baijal noted.

Most of the organised retail growth in India so far has been based out of mall developments with sales heavily dependent on footfalls and conversions thereafter.

However, the advent of transit retail will provide retailers with captive audience that is willing to spend. “Having said this, the transport hubs will have to create appropriate space with prominence and visibility, smart revenue models and correct product mix to ensure that retailers see value in their presence in a transport hub,” he added.

The proposed metro network and mega transformation of Indian railways offers US$ 7.5-billion retail opportunity by 2030.

It is expected that around 1,000 km of metro development will take place in India which opens opportunity for retailing to the tune of US$ 5.6 billion by 2030. As of 2019, there are about 500 metro stations across India with an estimated retail market size of US$ 0.6 billion.

Likewise, based on the commercial potential of the 400 redeveloped railway stations across India, it is estimated that the annual passenger traffic will increase to 18.2 billion by 2030, translating into a retail opportunity of US$ 1.9 billion by the year from US$ 0.1 billion in 2019.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.