Real Estate

Despite e-commerce boom, mall space to see a massive expansion: Anarock report

Our Bureau Chennai | Updated on June 28, 2019

Retail malls, which came into existence in the late 1990s, expanded aggressively in the past two decades. As much as 50 million sq ft of mall stock is operational across India’s top seven cities   -  Bijoy Ghosh

Tier-2 and 3 cities to contribute 28 per cent share

Even as there appears to be growing preference for online purchases, the country will see a sharp increase in mall space with addition of 65 million sq ft by the end of 2022, according to Anarock, a realty services firm.

Of the 65 million sq ft of new supply, the top seven cities will account for 72 per cent and the remaining 28 per cent (18.2 million sq ft) will be inTier-2 and 3 cities.

Mumbai Metropolitan Region, Delhi-NCR, Hyderabad and Bengaluru together lead in new supply with a combined mall space addition of about 34 million sq ft in.

“This new supply is also driven by the increasing interest of institutional investors — including PE players — who invested almost ₹1.9 billion into Indian retail between 2015 and Q1, 2019. Over 60 per cent of this investment corpus was infused in the last two years (2017 and 2018) alone, making these the best years for the retail sector in recent times,” said Anuj Kejriwal, Managing Director and Chief Executive Officer, Anarock Retail.

Overall, western region will see an addition of 25 million sq ft, followed by south India (21.7 million sq ft), north (11.9 million sq ft) and the east (6.4 million sq ft).

Nearly two-thirds of the total new supply (40 million sq ft) is expected to come up by 2020-end.

Aggressive expansion

Retail malls which came into existence in the late nineties expanded aggressively in the past two decades. Currently, there are 50 million sq ft of mall stock (includes only leasable malls) already operational across the top seven cities.

From mere 10 per cent share of the total supply during the 2003-2012 period, the overall mall share in Tier-II and III cities is expected to increase to 17 per cent during 2013- 2022 period, said Anuj Puri, Chairman, Anarock Property Consultants.

The penetration and the success of e-commerce in Tier-II and Tier-III cities in India, which is contributing to nearly 60 per cent in sales for e-commerce business, gave developers the confidence to eye these markets and tap the potential.

Prominent Tier-2 and 3 cities that will see strong retail space include Ahmedabad, Amritsar, Baroda, Bhubaneshwar, Chandigarh, Cuttack, Dehradun, Goa, Guwahati, Indore, Kochi, Lucknow, Nagpur, Mysuru, Surat, Rourkela, and Thiruvananthapuram.

However, currently NCR, one of the most expensive markets with average lease rentals in the range of ₹250-340 per sq ft, holds the highest vacancy levels due to oversupply.

Published on June 28, 2019

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