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GLITTER AND GRIT

New Delhi’s unglamorous Khan Market is India’s magnet for luxury retailers

By Curt Hazlett

By Western standards, New Delhi’s Khan Market looks like a pretty downscale place to spend your rupees. The open-air concrete structure could use some fresh paint, and a profusion of multicolored store signs gives it a busy, slightly slapdash look. This is no chrome-and-marble suburban mall.

But as is often true in India, Khan Market is much more than it appears to be. It is, in fact, the priciest retail real estate in India and the 24th most expensive shopping space in the world, according to Cushman & Wakefield’s 2006 ranking of global retail rents. That represents a jump of 17 places in just one year, the biggest of any shopping area in the world, and it places Khan Market between Belgium’s Rue Neuve, in Brussels (No. 23), and Finland’s Helsinki City Centre (No. 25).

The star status of the nearly 60-year-old market, which was founded by refugee traders from the newly created state of Pakistan just after that country’s separation from India in 1947, reflects the stew of factors shaping the evolution of Indian retailing these days. It also drives home two global truths: that location is indeed everything, and that a vibrant shopping center can be just as important culturally as it is commercially.

As for the location, Khan Market has the good fortune to be in Lutyen’s Delhi, a section of the Indian capital named after Sir Edwin Lutyen, the British architect who designed many of its grand imperial buildings. It is surrounded by neighborhoods that have grown affluent as India’s fortunes have risen, as well as by office buildings housing both government agencies and international organizations.

Given Khan Market’s upscale environs, it is no surprise that one travel guide has described it as “thick with Delhi intelligentsia and expats.” These people are drawn by good bookstores, imported food stores, cafés and coffee shops, stationery stores, tailor shops and even a dental office. That they can buy designer clothes and shoes there is an added plus.

Khan Market’s reputation as a cultural center got an additional boost in September, when it played host to an exhibition of photos by Time-Life photographer Margaret Bourke-White depicting the suffering that occurred during the separation of India and Pakistan, a brutal time in which an estimated 1 million people died. The heart-wrenching photos, many of them never shown before, attracted international attention, including a story in The New York Times.

Accompanying the photos were excerpts from Train to Pakistan, an acclaimed 1956 novel about the bloodshed, written by Khushwant Singh, one of India’s greatest living writers. As it turns out, Singh lives across the street from Khan Market, and in September he wrote a newspaper column in which he recalled how much it had meant to him over the years to have the market nearby — a convenient source for groceries, gossip and ice cream for his dog, Simba. Eventually, wrote the 91-year-old, “I became too old to cross the road because of fast-moving traffic. I could only look longingly at the Khan Market shops as I was driven to other destinations.”

Such devotion has helped Khan Market prosper, but so has the vast change that has taken place in India, where retail growth has soared because of the influx of jobs and rise in disposable income.

The economy of the Delhi metropolitan area, which includes New Delhi, has been a big winner in recent years, thanks in large part to a boom in telecommunications, technology, banking and tourism. The per capita yearly income of Delhi residents, already twice the national average, rose to $1,200 in 2005, from $1,100 in 2004. That relative affluence, coupled with a strong job market that has attracted workers from the countryside, has helped make Delhi one of the fastest-growing cities in the world.

Khan Market has been in the right place to take advantage of that. “Branded players look for quality space in a good location, which is exactly what Khan Market offers,” said Sanjay Dutt, Cushman & Wakefield’s executive director for transaction services in India. “This, in turn, has pushed up rents in the district because of a lack of available space.” The international brands to be found there include Benetton, Nike and Swarovski.

It is likely that the demand for quality space will continue to increase, because in the fall Delhi officials began cracking down on stores operating illegally in residential areas. The “sealing,” as it is called, has set off protests by shopkeepers whose businesses have been shut and led to a scramble to find new store locations conforming to regulations.

According to Cushman & Wakefield, retail space at Khan Market rented for $180 per square foot in June, up 75 percent from a year earlier. The country’s second-highest store rents, at $142 (up 111 percent), were in New Delhi’s upscale South Extension area, where the retailers include Benetton, Mango and Tommy Hilfiger.

Meanwhile, modern retail continues to expand in the region. In its annual review of the Indian retail market, U.K. real estate consulting firm Knight Frank said the Delhi region will have about 78 new shopping malls in operation by 2008, for a total of some 25 million square feet of new space.

“For the growing middle-class population [in the Delhi region], shopping has become more of an ‘event’ and a family entertainment avenue,” said the report, released in October. “This has led to the development of large format malls that are destinations in themselves and have the right mix of shopping and entertainment under one roof.”

Such projects are part of a broad move in India toward “organized” retail and away from the traditional small-shop approach. Dutt points out that India’s organized retail is expected to grow by about 45 percent a year over the next five years, which would boost its share of the market from under 3 percent to about 12 percent.

Knight Frank cautions that the success of those new retail projects will depend in large part on the quality of their locations. In that respect, the humble Khan Market seems to have an edge. With the city’s wealth growing daily, the neighborhood stands to attract even more of the intelligentsia, and the city government has launched a beautification drive to spruce up the market.

But if what bloggers say is any indication, the market is just fine as it is. In addition to good food and coffee, “they also have hip clothes and shoe stores,” wrote a young Bangalore woman who calls herself Rash, “but few of us go to KM for clothes or even shoes. We go there to hang out and people watch. And boy, what people can you watch! “For starters, there are the ladies who lunch (and talk very loudly while they do so) in their solitaires and Chanel shades. Not to mention the Louis Vuitton bags. They step out of their huge cars and strut across the market with a proprietorial air.

“But the species that has really taken over the place are the firangs,” she wrote, using Hindi slang for Caucasians. “Makes you realize that Delhi has an expat population that’s huger than you had ever thought. Come summer and they can all be found on the terrace, sunning themselves fearlessly. Heatstrokes be damned!”

She might well have repeated Noel Coward’s observation that only mad dogs and Englishmen go out in the midday sun.