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Over 60% international retail brands expanded operations in Jul-Dec 2022: CBRE Report

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Bengaluru: International brands such as Tim Hortons, Victoria’s Secret, and Uniqlo continued to expand retail footprint during July-December 2022 despite the pandemic pause, according to the India Retail Figures H2 2022, a report by real estate consulting firm CBRE South Asia Pvt. Ltd.

Uniqlo opened its first store in Chandigarh, Tim Hortons entered Ludhiana, and Starbucks, Biba, and Shoppers Stop opened in Dehradun. During the second half of 2022, the American home furnishings shop chain Pottery Barn forayed into Delhi-NCR, opening two stores in rapid succession.

German lifestyle brand Adidas opened its largest experience store in Delhi-NCR, and Zara, Nike, and Azorte are among the other companies that have launched experience as well as flagship stores.

“The Indian retail sector is recovering, and we anticipate that it will continue to gain momentum through 2023. Even amid difficult global economic conditions, international brands are expanding not only in tier 1 cities but also penetrating tier 2 and 3 cities as they see India as a potential market,” said Anshuman Magazine, chief executive officer of CBRE.

Fashion and apparel retailers continued to expand their footprint, accounting for a share of over 42% in overall leasing in July-December 2022. Other prominent categories that continued to drive leasing activity during July-December 2022 included food & beverage (~12%), along with hypermarket (~7%) categories. The entertainment category also emerged with a ~6% share in overall space take-up.

Brands such as Lavazza and Armani/Caffe from Italy, Jamba from the United States, and The Coffee Club from Australia are expected to foray Indian market over the next few months.

The revival of brick-and-mortar

Despite the continued growth of online retail, brick-and-mortar stores continued to gain prominence among Indian shoppers. As a result, strong footfalls led to expansionary space take-up by domestic and international retailers, especially during July-December 2022.

“As the cities started to reopen after the pandemic, many shoppers returned to physical retail and since then have adopted ‘hybrid commerce,” said Ram Chandnani, managing director, advisory and transactions services, CBRE India.

“Sales in July-December 2022 surpassed the pre-pandemic levels owing to increased consumer confidence, leading to a hike in spending. Leasing momentum is expected to further pick up in January-June 2023 owing to anticipated space take-up in newly completed malls.”

According to the report, retail leasing activity surged by 5% to 2.43 million sq. ft in July-December 2022 as against 2.31 million sq. ft. reported in January- June 2022 period. Overall, in 2022, leasing activity in the retail sector grew by 20% year over year to 4.7 million sq. ft.

Market wise

Bengaluru and Delhi-NCR, followed by Chennai and Mumbai, led leasing activity, together accounting for almost 80% of the overall space take-up during July-Decmber 2022 period.

Rental values inched up on a half-yearly basis in certain micro-markets across most cities, driven by robust retail demand. Among high streets, rents rose by about 4-8% across select locations in Delhi-NCR, Bengaluru, by 4-12% in Ahmedabad, and by about 1-3% in Mumbai. Meanwhile, mall clusters in Delhi-NCR and Bengaluru witnessed rental growth of 3-15% and 2-6% respectively.

With the addition of two investment-grade malls totaling nearly 1.0 million square feet in Bengaluru and Pune, supply addition during Jul-Dec ’22 increased by 129% on a half-yearly basis. Even though supply addition decreased by 69% year-over-year during the review period, pent-up supply is expected to become operational in the first half of 2023, and the overall supply for the year is predicted to exceed the pre-pandemic levels.

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