Retail mall absorption across top seven cities has gone up by 69 per cent in the first calendar quarter, real estate services firm JLL said in a report today.
While only 160,000 sq ft of fresh mall supply came in during the quarter, the absorption stood at 352,000 sq ft. Of the total leasing activities, 84 per cent were in Delhi – NCR, which recorded 292,000 sq. ft. of mall space absorption. The other markets were Hyderabad with 31,000 sq ft and Chennai (17,000 sq ft).
“The increased pace of leasing activities is heartening as it signals towards a growth phase in India. Brands, both national and global, are looking at increasing their presence in key markets, to capitalise on the stability and growth in the economy,” Ramesh Nair, CEO and Country Head, JLL India, said.
The market also saw a withdrawal of close to 1 million sq. ft. of mall space bringing down the total retail space stock by a per cent to 74.5 million sq ft from the previous 75.6 million sq ft. The malls that close are typically those which were constructed many years ago and did not go through periodic modifications to suit the changing requirements of retailers and shoppers.
Mumbai saw the closure of mall space measuring 850,000 sq. ft. in the city, bringing down the vacancy to a manageable 10 per cent in Q1 2018 against 13 per cent in Q1 2017.
“Landlords in India are actively adjusting tenant mixes and are placing greater emphasis on the experience of shopping. International brands have been entering the country and are expanding rapidly in the past couple of years, with more expected to look for quality space across the country,” Nair added.
Some international brands like Kiabi, Mavi, Avva, Colin’s, Damat, Tudba Deri and Dufy are likely to enter the country in the next few months, he said.
In the past few months, private equity have taken increased interest in key leasehold retail assets across the country. A leasehold retail property usually has a higher probability of success as the developer is actively involved in the key functions of mall management, especially tenant management.
Various new regulations like easing foreign investment for single-brand retailers, longer shopping hours and an updated framework for establishing real estate investment trusts (REITs) have attracted the attention of various private equity funds, the report said.