MUMBAI // Shoppers in India will no longer need to head overseas to gaze at sharks in an aquarium or take a boat ride down man-made canals whilst at the mall.
About a half-hour's drive outside of Delhi, construction workers are building the Grand Venezia, described as India's first retail tourism destination.
With its 130,000 square metres of retail and leisure space, an indoor amusement park, Venetian canals with gondola rides and a luxury hotel, the mall resembles the huge projects Dubai developers were building five years ago.
The emirate is holding off on new projects, but India has relatively few malls for its 1.2 billion population - one that is growing wealthier each year. Property developers are taking advantage of the situation, and 94 shopping centres with a total of 3.43 million sqmetres of retail space are expected to come online by the end of next year, according to Jones Lang LaSalle.
Pranay Sinha, the managing director of Star Centres, which is developing the Grand Venezia, said there was still room for more such shopping environments. With India's often intense climate and growing middle class, there was a demand for more modern, covered retail options, he said.
"India is a country with diverse climates, extreme climates," Mr Sinha said on the sidelines of the India Fashion Forum. "And it is a country with a massive amount of consumption and … a strong amount of retail, whether modern or traditional."
India represents an enormous opportunity for retailers. Per capita GDP is expected to grow from an estimated US$1,030 (Dh3,783) last year to $1,450 by 2013, according to McKinsey, a management consultancy. By 2030, there is forecast to be 91 million middle-class households, up from 21 million today, and the cities of Mumbai and Delhi will each have a GDP greater than that of Malaysia, says McKinsey.
Still, India's shopping centres market was hard hit in the economic downturn.
Despite the relatively strong growth in the Indian economy, retail rents dropped by about 33 per cent from their peak in 2008, Jones LangLaSalle says. This was in part due to a huge amount of new retail space that came online, but also poorly designed shopping centres. Often, developers would take any piece of open land and build a shopping centre without a proper design, management or demographics.
"There has been a herd rush of developers," said Mr Sinha. "Most people thought it was an easy game. But then, as they went along, they realised what the intricacies of the business were, what the challenges were." Although retail sales continued to grow, merchants became cautious about expansion. They negotiated lower rents with developers and switched to payment models based on store revenues, rather than a flat rate.
Kishore Bhatija, the director and chief executive of Inorbit Malls, said the scope for malls was still vast because India's retail landscape was still dominated by small, independent shops. But time will tell which developers will be successful.
"There will be less and less players as we go along," Mr Bhatija said. "In the last couple of years, we had a number of shopping centres coming up, also because of the fact that we had a lot of private equity, foreign equity which came in, which fuelled the growth … Maybe two and a half, three years down the line, the supply of shopping centres would taper down."
Industry players will also need to work together to ensure the future success of shopping centres and avoid crowding in certain markets, said John Larman, of the property developer Panchshil Realty.
"The associations and the retailers groups and the real estate groups, they will have to start thinking about this a little more strategically," Mr Larman said.