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Forty years after the United States began its infatuation with indoor shopping malls, India, with a population of more than 1 billion, is going through its first wave of serious mall construction.

As late as three years ago, a visitor to any of India's major cities would have been hard pressed to find a western-style shopping mall. Now about 50 shopping centers and malls are open. Another 300 are on the drawing boards, according to Pranay Sinha, the Jones Lang LaSalle associate director for retail and leisure in Mumbai (formerly Bombay). They are enclosed, air-conditioned, multi-level malls of at least 100,000 square feet. “For every five schemes you are aware of, there is one scheme you are not aware of,” Sinha adds.

That's a lot of activity, compared to planned U.S. mall construction, but in a nation that size, there's still plenty of room for growth.

In the past decade, the change of the Indian economy from a basically socialistic model to a more capitalist model has created millions of jobs, expanded the country's middle class and given those who work disposable income. In addition, with added wealth, Indians travel more and see how shopping patterns differ elsewhere in the world.

On the development side, says Sinha, the country previously suffered from a lack of institutional funding, foreign players and organized retail chains. The latter, in particular, is evolving almost as quickly as the phenomenon of the malls. A few national chains have appeared so developers can now count on a growing base of popular anchors, says Pawan Swamy, head of the Colliers International office in Mumbai.

The most popular Indian anchors, Swamy says, include Shoppers Stop, Globus, Pantaloon, Lifestyle (Landmark, the parent company, is based in Dubai, but the owner is considered a “non-resident Indian”) and hypermarkets Big Bazaar and Giant.

European chains in India include Marks & Spencer, Benetton and Mango. Few U.S.-based retailers — other than fast-food chains McDonald's, KFC and Pizza Hut — have entered the market. (One mall in development listed a Ruby Tuesday restaurant.)

But since branded merchandise is popular, Indian merchants have opened stores named after the retailer/designer whose products they sell: Reebok, Nike, Adidas, Lee, Arrow, Tommy Hilfiger, Swatch, Louis Vuitton and Hugo Boss, for example.

Cinemas also often anchor malls, says Rajesh Pandit, CB Richard Ellis' head of India's western region in Mumbai. Driven by government tax breaks, the old single theaters are being chopped up into three to five smaller screens, as was done in the U.S. years ago. “Mumbai didn't have a multiplex until last year,” says Pandit. “Now almost every area of the city will have one, and there are many planned.”

Indian developers have been conservative when it comes to malls, usually building small and then expanding after achieving a level of success. The Delhi suburb of Gurgaon has the highest concentration of malls. There, the average size is about 200,000 square feet, with anchors ranging from 50,000 square feet to 60,000 square feet. Newer malls are bigger, with some planned in the 500,000 square foot to 1.1 million square foot range.

“Of the 300 shopping malls planned,” says Sinha, “there's not more than five or six that an American company such as Rouse would consider. We have a long way to go yet, but there is a lot of activity and a buzz, which is very exciting.”

TAGS: Development
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