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Rents at key high streets dive as covid wave sinks retail hopes

The retail sector had seemed to be on the verge of recovery and was inching towards the pre-pandemic-level business. However, the second wave has once again curtailed this growth. (Pradeep Gaur/mint)Premium
The retail sector had seemed to be on the verge of recovery and was inching towards the pre-pandemic-level business. However, the second wave has once again curtailed this growth. (Pradeep Gaur/mint)

  • Delhi’s Khan Market, India’s most expensive retail location, saw average monthly rentals reduce by 8-17% to Rs1,000-1,100 per sq. ft in the January-March period compared with the corresponding year-ago quarter, according to data by Anarock Property Consultants

BENGALURU : Rentals have fallen at some of India’s top high street locations, as new local curbs hammer retail hotspots which were barely emerging from last year’s setbacks.

Average March quarter rentals at Delhi’s Khan Market, India’s most expensive retail location, fell 8-17% from a year ago to 1,000-1,100 per sq. ft, data from Anarock Property Consultants showed. Rentals at Delhi’s GK-1 M Block fell 13-14% and are currently 300-350 per sq. ft. Similarly, other high street markets such as Kala Ghoda, Bandra Linking Road and Fort in Mumbai also saw rentals drop 5-10% during the same period.

“The retail sector has been one of the worst affected due to the pandemic since early 2020. With almost zero sales amid lockdown and thereafter as well for a few months, we saw retailers closing stores or even curtailing expansion plans. As a result, the average monthly rentals across major high street retail markets mostly saw corrections across cities," said Pankaj Renjhen, chief operating officer and joint managing director, Anarock Retail.

There were, however, a few markets that saw an upward trend in rentals. In Hyderabad, areas such as Gachibowli, Banjara Hills and Jubilee Hills saw average retail rentals rise in the March quarter against a year ago.

The retail sector had seemed to be on the verge of recovery, and was gradually inching towards pre-pandemic levels of business, when the second wave of coronavirus struck, destroying all the gains.

Mall operators are yet again facing considerable challenges due to the rapidly spreading second wave, leading to increased restrictions and economic uncertainties, rating agency Icra said in a recent note. The second wave has resulted in increased pressures on mall operators’ cash flows and rising concerns, given the fixed nature of debt obligations, particularly in the absence of government support, Icra said.

Rentals had begun to drop at several high streets last year as many stores shuttered as sales suffered during the first lockdown and after.

Brigade Road in Bengaluru saw a 8-17% drop in rentals in the March quarter from a year ago, with current average monthly rentals between 250-275 per sq. ft. In Indiranagar, the rentals range 225-250 per sq. ft.

Post a 5-10% decline, monthly rentals at Kala Ghoda and Fort area in Mumbai are at 450-500 per sq. ft, while in Bandra, rentals on Linking Road are around 750-900 per sq. ft.

In shopping malls, too, after having to extend rental waivers in 2020-21, operators are again looking to offer rental waivers and concessions this year, given the reduction in footfalls and consequent retail spends, particularly in geographies facing high curbs, Icra said.

The weakening financial profile of tenants in multiplexes, family entertainment centres, food courts and restaurants is expected to worsen the situation.

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