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Funds dry up to hurt mall developers: Expert

Source: PTI
October 14, 2008 17:59 IST
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The global financial crisis seems to have taken its toll on the country's mall developers, many of whom are likely to shelve various projects.

According to global real estate consultant Jones Lang LaSalle Meghraj, the mall developers are bearing the brunt of the global meltdown in terms of lack of funding for their projects.

"The mall developer community has been impacted by the economic scenario and the lack of funding in the market. A fair number of projects will not see the light of the day, as funding has dried up," global real estate consultant Jones Lang LaSalle Meghraj Managing Director (Retail) Shubhranshu Pani said.

Nevertheless, this was an opportunity for long-term retail players to continue investing in retail projects, he said, adding retailers were not directly affected by the crisis as most of them were local players.

"There has been very low-level impact of the global economic scenario on retailers. Retailers, who are currently operational in the country, are largely local players, and their operations continue to expand and grow," Pani said.

In the last three quarters, these players had been choosing to work with landlords, and apart from a few oversupplied market pockets in the country, there would not be any issue in leasing retail properties, he added.

The market is worried about timely delivery of projects by developers to retailers as the delay would mean loss of seasonal inventory.

"I see high growth in value-retail across markets. Supermarkets and hypermarkets will grow exponentially," Pani said.

With correction in real estate and growth on track, retailers' expectations were becoming more realistic and their expansion plans more concrete, he added.

Pani said developer community had gradually become more sympathetic to the compulsions and needs of retailers.

"I see many developers beginning to show empathy and understanding of retailers' concerns and issues with many opting for minimum guarantee and revenue share arrangement with retailers and sharing a bit of their risk," he added.

With delivery of projects remaining an issue, going forward, only serious developers interested in retail real estate were expected to be in the fray, he said.

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