Moumita Bakshi

New Delhi, June 14

THE initial mall euphoria that had pushed nationwide mall rentals to unrealistically high levels seems to have died down with markets such as Gurgaon now witnessing a price correction, even as parts of the National Capital Region and Mumbai see rental stabilisation.

"Any healthy sales graph has a levelling off. In the real estate sector too the steep increase in rentals seems to be stabilising this year as demand rationalises. But there continues to be high demand for economically viable projects by credible developers who lay due emphasis on professional aspects like mall mix, and mall management. Overall there is a selective demand in the market," says Mr Ajay Khanna, Executive Director of DLF Retail Developers Ltd.

Mr Khanna prefers to term the realignment of rentals as "proper alignment" rather than a correction.

According to data available with global real estate consultant Cushman and Wakefield, mall rentals in Gurgaon have dipped. Against a high of Rs 100 per sq ft and a low of Rs 60 per sq ft in 2004, the average rental value dropped to a high of Rs 90 per sq ft and a low of Rs 55 per sq ft during 2005. Mall rentals remained stable in Nariman Point (Mumbai), East Delhi, Noida and Greater Noida, while rose in places such as South and West Delhi, Vashi (Mumbai), Lower Parel (Mumbai) and Malad (Mumbai).

Mr Sanjay Verma, Joint Managing Director, Cushman and Wakefield India, feels that as more and more developers announced projects, the initial enthusiasm pushed up prices even in markets where projects may not have been viable. "With supply exceeding demand levels, there was a price correction in some parts of the country. But it is not as if the industry is moving southwards," he adds.

He sees an overall healthy situation in mall rentals in South and West India where the supply is limited and the demography is strong. "In places like Vashi, for instance, the rentals continue to rise," he says.

However, Mr Abhijit Das, Head of Ansal Plaza Mall Management company, estimates a 13 per cent rise in rentals in Delhi. "The occupancy in malls is also up. Ansal Plaza, which had an occupancy rate of 92 per cent last year is now at 98 per cent occupancy level," Mr Das says.

(This article was published in the Business Line print edition dated June 15, 2005)
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