The second quarter of 2008 saw new mall supply of approximately two million square feet across major Indian metropolitan centres vis-à-vis the six million square feet anticipated. The majority of this expected quality retail space has been staggered to the latter half of the year as well as to the next year, says a report from Cushman & Wakefield.
According to the report, retail rentals stabilised across most main streets and malls in all major cities this quarter, with the exception of the Rajarhat micro-market of Kolkata and Goregaon in Mumbai, which saw more than 50 per cent growth in prime mall rentals over the last quarter.
Rajneesh Mahajan, director of retail services at Cushman & Wakefield, says, “Despite lack of quality space in the market, the top eight cities in India are currently witnessing around 18 per cent vacancy across the 40 million square feet of operational malls. This can be attributed to the fact that most of the supply has come within the same micro-markets targeting the same catchments, thereby creating an oversupply within respective neighbourhoods.”
With influx of many international retailers and growing urbanisation in the country, the demand for retail real estate continues to remain strong. However, the focus is essentially on premium high streets and promising developments.
On cities, the report says, Mumbai is expected to witness approximately 1.7 million square feet of new mall supply in the next four to six months, while Pune witnessed no new mall supply in 2Q 2008 primarily due to delay in commencement of new mall developments. Kolkata witnessed an addition of 370,000 square feet of new mall supply, and Ahmedabad saw the launch of its first mall for the year on SG Highway in 2Q 2008, measuring approximately 350,000 square feet.
Mall rentals in Bengaluru, in continuation with the trend of the previous quarter, remained stable across all micro-markets. In Chennai, malls such as Ampa and Coramandal, which were slated to enter the market this year, have been delayed and are expected to start operations only by next year. In NCR, the second quarter witnessed mall supply of approximately 625,000 square feet, against four million square feet of projected supply for the same period.