India’s
total mall supply for the year 2012 has witnessed a disappointing 3.44 million
square feet (MSF) mainly due to deferment of over 58% of the announced projects
in top eight major cities, according to Cushman & Wakefield’s latest retail
reports, which put the blame on government’s announcement of FDI in both single
and multi-brand retail.
Jaideep
Wahi, Director, Retail Agency, Cushman & Wakefield India said, “The expectation from FDI announcements in
retail – both single brand as well as multi- brand – has been welcomed by
developers as it would generate greater demand for quality space. However given
that the actual demand resulting from these announcements would take 12- 18
months to start manifesting, many developers with initial plans for retail have
pushed their projects for next year thus widening the gap between expected to
actual mall supply for the year. An expected 12 msf of new mall space is
expected in 2013 which will be a mix of deferred spaces as well as new
projects.”
The
highest deferment of supply was recorded in Mumbai and Hyderabad where none of
the planned supply entered the market, followed by Chennai (87%) and NCR (75%).
Total of 10 new malls started operations in 2012 with Bengaluru witnessing the
highest mall supply of 1.86 million sq. ft. in this year, the report further said.
Average
mall vacancy across cities stood at 20%, a decline of 1% over last year,
partly aided by the large deferment of malls. Ahmedabad has witnessed the
sharpest drop of 7% in mall vacancy levels even while it recorded the highest
vacancy levels in 2012. Hyderabad, Mumbai and NCR witnessed marginal
improvements of 1-2% each on account of increased leasing activities. Bengaluru
and Chennai witnessed approximately 2% rise in mall vacancies owing to influx
of new mall space and a general non availability of quality mall space in these
cities.
“Established retailers are scouting for quality
retail spaces, be it malls or main streets. Quality has been a key concern for
most retailer especially international brands, thus despite existing available
retail space, mall vacancy remained high. Good connectivity to large catchment
areas with ample infrastructural support is the pre-requisites for retail
spaces in malls and main streets of any locality to attract the retailers and
command good rentals,” Jaideep Wahi added.
MALLS
While
Ahmedabad witnessed the highest average mall rental increase of 23% over last
year followed by Kolkata at 12%, Pune saw a decline of 4% in mall space rentals
owing to a slowdown in retailer activity and an oversupply condition for mall
space in certain micro markets, the report pointed out.
Vastrapur
in Ahmedabad has showed the strongest growth of 60% while Pune (Nagar Road) and
Bengaluru (Banerghatta road) rose considerably by 30% during the year. Many
micro markets in Bengaluru (Cunningham Road, Rajarajeshwarinagar, Whitefield
and Mysore Road) recorded year on year drop in mall rental values.
The highest year on year drop of 43% was recorded in
Cunningham Road while the rest of the locations dipped in the range of 13-25%. Pune’s MG Road micro market also witnessed slight mall
rental decline of 6% over the year in the absence of demand due to the low
availability of quality mall space.
HIGH
STREETS
Mumbai saw the highest
average increase in high streets rentals of approximately 16% year on year
which was closely followed 14% in Kolkata. The high street of Vittal Mallya Road in Bengaluru
experienced maximum rise of approximately 58% in rentals closely followed by
Colaba Causeway (approximately 56%) in Mumbai.
Khan market remained the most
expensive retail location with rental values at INR 1250/sf and registered a
rise of approximately 4% over last year. While most high streets experienced
rise in rentals or remained stable, select high streets of Bengaluru (Brigade
Road, Sampige Road, Kamanahalli Main Road and Commercial Street) and Chennai
(Usman Road – North and Anna Nagar 2nd Avenue) witnessed year on year drop in
rental levels, the report further stated.
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