After two challenging years marred by the pandemic, mall owners are seeing recovery in rental incomes as multiplexes resume full scale operations besides strong revival in sales and footfalls. According to analysts, rental income for mall owners is expected to surpass the pre-Covid levels in FY23.

Mukesh Kumar, Chairman, Shopping Centres Association of India (SCAI) and MD & CEO at Quest Properties India, said consumer sentiment has been positive across the board whether in metros, tier-1 and tier-2 cities. “In the past two to three quarters, malls have witnessed strong recovery in terms of footfalls and revenues. Besides resurgence in demand, factors such as full scale resumption of multiplex operations are also driving footfalls. Also, it’s no longer being driven by pent-up demand but the organic demand as consumer purchases are happening across categories.”

“Due to all these factors, even rental incomes of mall owners is witnessing a surge. New leases with brands are being signed at 15-20 per cent higher rentals than pre-pandemic levels. Even existing lease agreements have seen good hikes depending on the terms,” he added.

Driving footfalls

Multiplexes are typically the key anchor tenants and critical to driving footfalls at malls and strong content line-up at the box office has helped them garner higher footfalls and revenues, said analysts.

Pushpa Bector, Executive Director, DLF Retail, said rentals are moving northwards driven by not only surge in footfalls but also sales. “At a portfolio level, rentals have gone up by 20-25 per cent and sales are up nearly 115-120 per cent compared to pre-pandemic levels. This is even higher for our luxury properties,” Bector added.

According to estimates by ICRA, rental income reached 80 per cent of pre-Covid levels on a full year basis in FY22 in the key malls in the top cities including Delhi-NCR, Mumbai, Bangalore, Hyderabad, Chennai and Pune.

In the agency’s recent report, Anupama Reddy, Vice President & Sector Head, Corporate Ratings, ICRA, noted: ‘‘On a same-store basis, the rental income of malls is expected to increase by around 30 per cent in FY23 and is likely to surpass FY20 levels by around 4 per cent to 6 per cent. With the normalcy in the trading values, the occupancy is expected to improve in FY23.”