New Delhi: Mall supply this year fell short by 60%, as only 5.7 million sq. ft of space was delivered across major cities in India, according to the annual retail report by real estate consultant Cushman and Wakefield Inc.
Around 9 million sq. ft of expected mall supply for the year was deferred to the future, due to poor demand from retailers, says the report. Of the proposed 44 malls at the beginning of the first quarter (January-March), about 18 were delivered by the year-end. The overall vacancy rates for the major cities as of December was 17% compared with a 16.7% vacancy rate in December last year.
Mumbai had the largest share of this year’s mall supply at 1.8 million sq. ft, followed by Hyderabad (1.1 million sq. ft) and the National Capital Region (NCR) (0.9 million sq. ft). Bangalore saw the highest mall supply deferment with 80% less mall supply than what was expected.
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“This slowdown in mall construction need not be viewed as a negative growth indicator for the retail real estate segment,” said Jaideep Wahi, director, retail agency, Cushman and Wakefield India Pvt. Ltd. “The current pace is in fact expected to help in maintaining a healthier supply to demand equation, especially for oversupplied micro-markets.”
Hyderabad was the only city which saw more than 90% of its anticipated mall supply for the year becoming operational. Kolkata, with a supply of nearly 0.7 million sq. ft, saw about 65% of its expected mall supply become operational by year-end.
In the fourth quarter (October-December), the highest vacancy was seen in NCR at 27% and Pune at 16%, while the lowest vacancy levels were seen in Chennai at 1% and Bangalore at 3%.
Mumbai has seen vacancy decline from 10% to 8%, despite a 25% increase in its mall stock in the year to December.
While mall rentals stabilised after the first half of 2009, they continue to remain under pressure due to weak leasing activities, the report said.
Micro markets in NCR, Bangalore and Mumbai saw a 40-53% decline in rentals in the fourth quarter of 2009 over the same period last year. Bangalore’s prominent streets such as Brigade Road and Commercial Street were the only micro markets to post a 10% rise in rentals over last year.
Graphics by Paras Jain / Mint