While there has been a noted improvement in rental appreciation in the range of 7-9% in some of the main street locations such as Nungambakkam High Road (Chennai), Lokhandwala Andheri and Fort/Fountain (Mumbai) in the fourth quarter of this fiscal, Commercial Street (Bengaluru), Thane (Mumbai) and MG Road (Pune), Koregaon Park (Pune) have seen a q-o-q drop of rentals in the range of 3-4% due to limited demand, according to a report by Cushman & Wakefield on real estate markets in major cities covering office and retail sectors.
Due to unsteady economic situation and ensuing elections in India, the supply of new commercial space has been poor in major cities. According to the report, the Q4 2013 has recorded the mall vacancies of 14.5 per cent, compared to 15.5% in the corresponding previous quarter recording one per cent drop across top eight cities.
Chennai, Hyderabad and Kolkata were the largest contributors of commercial floor space clocking a total supply of 1.18 msf, the report said.
While Chennai witnessed a mall admeasuring 0.31 msf with Velachery becoming operational, Hyderabad saw a mall admeasuring 0.43 msf becoming operational in Kukatpally and 0.44 msf mall opened in South Central Kolkata with dedicated zones for luxury and premium brands, the first of its kind in the city, the report said.
As for as rentals in the main street locations are concerned, moderate rental increase was recorded in the range of 2-4% in FC Road (Pune) and Kemps Corner/Breach Candy (Mumbai) micro markets.
The report also noted that while most established main streets across all cities have witnessed high demand from national and international retailers, Hyderabad showed negative trend due to uncertain political situation.
Certain emerging main streets in Bengaluru, Hyderabad and Kolkata have witnessed some traction. Apparels and food and beverages (F&B) retailers were witnessed expanding extensively in all cities. However, select main streets like Commercial Street (Bengaluru), Thane (Mumbai) and MG Road (Pune), Koregaon Park (Pune) saw a q-o-q drop of rentals in the range of 3-4% due to limited demand.
Lack of optimum sized ground floor plates in certain established main streets of Bengaluru and NCR proved to be a hindrance for many interested occupiers.
Limited supply reduces mall vacancy
Though mall rentals for most of the locations across major cities remained stable, in wake of limited availability and high enquiry levels, malls at Malleshwaram (Bengaluru) saw a quarterly uptrend of 12% while malls in Lower Parel, Ghatkopar and Thane in Mumbai had witnessed quarterly appreciation of 2-5%.
On the other hand, Mulund (Mumbai) recorded an over 15% drop in rentals due to tenants and shoppers preferring newer malls in Ghatkopar. Select locations in Pune and Chennai saw a quarterly rental correction of 4-9% due to slow transaction activity. In the wake of ongoing metro construction work and resultant traffic congestion problems, mall rentals in Western Chennai saw a dip of 4.5% q-o-q, said the report.
Commercial realty outlook for 2014
In the first quarter of 2014, nearly 1.61 msf of mall supply is expected across four cities – Pune, Bengaluru, Hyderabad and Kolkata. While two malls are expected in Bengaluru and Pune each, one mall is anticipated to become operational in Hyderabad. In Kolkata, new sections of an operational mall are expected to be open during Q1 2014
However, Chennai, Mumbai and NCR drew a flack with no mall is expected to be operational in 2014 from these cities.
Malls in most micro markets are anticipated to register a stable rental trend over the next quarter, apart from and Lower Parel in Mumbai, South Delhi in NCR and Vastrapur in Ahmedabad where rentals are expected to increase owing to churn, higher occupancies and sustained demand. Existing high vacancies in malls of Mulund (Mumbai) may lead to a rental decline in the coming quarter.
Rentals in some of the main streets in cities like Ahmedabad, Bengaluru, Chennai and NCR may witness an upward revision in the next quarter owing to healthy demand levels and limited supply, whilst they will remain stable in most of the other main streets.
Due to unsteady economic situation and ensuing elections in India, the supply of new commercial space has been poor in major cities. According to the report, the Q4 2013 has recorded the mall vacancies of 14.5 per cent, compared to 15.5% in the corresponding previous quarter recording one per cent drop across top eight cities.
Chennai, Hyderabad and Kolkata were the largest contributors of commercial floor space clocking a total supply of 1.18 msf, the report said.
While Chennai witnessed a mall admeasuring 0.31 msf with Velachery becoming operational, Hyderabad saw a mall admeasuring 0.43 msf becoming operational in Kukatpally and 0.44 msf mall opened in South Central Kolkata with dedicated zones for luxury and premium brands, the first of its kind in the city, the report said.
As for as rentals in the main street locations are concerned, moderate rental increase was recorded in the range of 2-4% in FC Road (Pune) and Kemps Corner/Breach Candy (Mumbai) micro markets.
The report also noted that while most established main streets across all cities have witnessed high demand from national and international retailers, Hyderabad showed negative trend due to uncertain political situation.
Certain emerging main streets in Bengaluru, Hyderabad and Kolkata have witnessed some traction. Apparels and food and beverages (F&B) retailers were witnessed expanding extensively in all cities. However, select main streets like Commercial Street (Bengaluru), Thane (Mumbai) and MG Road (Pune), Koregaon Park (Pune) saw a q-o-q drop of rentals in the range of 3-4% due to limited demand.
Lack of optimum sized ground floor plates in certain established main streets of Bengaluru and NCR proved to be a hindrance for many interested occupiers.
Limited supply reduces mall vacancy
Though mall rentals for most of the locations across major cities remained stable, in wake of limited availability and high enquiry levels, malls at Malleshwaram (Bengaluru) saw a quarterly uptrend of 12% while malls in Lower Parel, Ghatkopar and Thane in Mumbai had witnessed quarterly appreciation of 2-5%.
On the other hand, Mulund (Mumbai) recorded an over 15% drop in rentals due to tenants and shoppers preferring newer malls in Ghatkopar. Select locations in Pune and Chennai saw a quarterly rental correction of 4-9% due to slow transaction activity. In the wake of ongoing metro construction work and resultant traffic congestion problems, mall rentals in Western Chennai saw a dip of 4.5% q-o-q, said the report.
Commercial realty outlook for 2014
In the first quarter of 2014, nearly 1.61 msf of mall supply is expected across four cities – Pune, Bengaluru, Hyderabad and Kolkata. While two malls are expected in Bengaluru and Pune each, one mall is anticipated to become operational in Hyderabad. In Kolkata, new sections of an operational mall are expected to be open during Q1 2014
However, Chennai, Mumbai and NCR drew a flack with no mall is expected to be operational in 2014 from these cities.
Malls in most micro markets are anticipated to register a stable rental trend over the next quarter, apart from and Lower Parel in Mumbai, South Delhi in NCR and Vastrapur in Ahmedabad where rentals are expected to increase owing to churn, higher occupancies and sustained demand. Existing high vacancies in malls of Mulund (Mumbai) may lead to a rental decline in the coming quarter.
Rentals in some of the main streets in cities like Ahmedabad, Bengaluru, Chennai and NCR may witness an upward revision in the next quarter owing to healthy demand levels and limited supply, whilst they will remain stable in most of the other main streets.
Overall demand is expected to remain stable until the general elections expected mid-year, post which retailers will act on their expansion plans based on the new government’s policies, the report further said.
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