New Delhi: The government's decision to operationalise FDI in multi-brand retail would help the realty sector as the move would create demand for retail space and boost mall development in the country, real estate developers and property consultants said.
"This is much awaited news which will bring in positivity not only in the sentiment, but will bring in FDI flows into the country. It will help in investment for back-end retail to improve efficiency and productivity in retail and also help boost mall development in India," Jones Lang LaSalle India Chairman and Country Head Anuj Puri said.
Puri said the decision would help in absorption of surplus retail space in shopping malls across the country.
The Cabinet on Friday decided to operationalise 51 percent FDI in multi-brand retail but left it to the state governments to allow setting up of such stores.
Asked whether states would allow foreign retailers to set up shops, Puri said: "We expect Congress-ruled states to allow it. Bigger states Maharashtra and Delhi, where retailers want to open their stores, will allow it as they are being ruled by Congress".
Commenting on the development, DLF Group Executive Director Rajeev Talwar said: "The government has announced policy measures and reforms. It is now time to put through PSU disinvestment and monetary measures by RBI".
On allowing multi-brand retail, he said: "This is the only measure which can connect rural producer to urban consumer".
CREDAI, the apex body of realtors, President Lalit Jain said: "It is a very good step. We welcome this. This will open a new chapter in the Indian economy".
Asked about impact on realty sector, Jain said FDI in multi-brand retail would enhance the business of companies developing malls. "FDI in multi-brand retail would create employment opportunities, which would create housing demand".
Property consultant Knight Frank Regional Director (North) Mudassir Zaidi said: "This step will help in revitalising the retail sector as many global brands are wanting to come to India. Because new players coming in, we will see lots of new demand coming to the real estate sector for retail spaces. Eventually, property prices may also firm up in future."
Another consultant Cushman & Wakefield said within the next 12-24 months international retailers will accelerate their entry strategy.
"As a result, the developers involved in shopping centre development, who were badly hit since 2008, will also get a tremendous boost and we will witness serious players expanding in this space.
"Over the medium to long term, the retail sector, real estate industry and the end-consumers will benefit from the move and the economy on the whole will gain momentum, depth and size," said Sanjay Dutt, Executive Managing Director, South Asia, C&W.