Demand for retail space in India remained subdued in the first half of 2012, according to property services firm DTZ-UGL. This was due largely to the controlled supply of mall space and stable rentals.
DTZ-UGL provides retailers with a global, integrated, end-to-end service offering and investor services, property and facilities management. While high inflation has checked consumer spending and delayed purchase decisions, the slowdown in economic growth has resulted in a sense of uncertainty among retailers, putting their expansion plans on hold.
The subdued demand for retail space has also led to developers going slow on several under-construction projects. As a result, the retail markets in NCR-Delhi and Mumbai did not witness any new constructions. Bangalore was the only city to witness new mall supply of 1.3 million square feet.
“Even as Indian consumers have exhibited a growing demand for luxury and high-end imported brands, the steep depreciation in domestic currency value is set to adversely impact demand for imported products in the short term,” said Anshul Jain, CEO, DTZ India.
The three major cities recorded a cumulative vacancy level of 9.96 per cent of the total retail mall stock. Delhi-NCR and Mumbai registered double-digit vacancy levels at approximately 13 per cent and 10 per cent respectively. Bangalore registered the lowest availability level of 3 per cent. This will help retailers negotiate favourable deals from developers, Jain added.