The bustling malls wear a sombre look—at least for those run their businesses around them.
An oversupply of retail space combined with an aversion to expansion by retailers has caused a sharp fall in retail rents in key markets, in line with the overall mood of an economic downturn. A further correction is seen ahead.
According to a first-quarter survey conducted by real estate consultancy Cushman & Wakefield, both malls as well as main street stores saw rental values drop by 11 to 42 per cent in the National Capital Region and Mumbai in the January-March quarter.
Mumbai saw the sharpest decline in rents for both malls (42 per cent in Goregaon) and main streets (38 per cent in the Colaba Causeway).
In NCR, the main street location of M Block, Greater Kailash, witnessed a 25 per cent decline in rental values while mall rentals in Noida dropped by 17 per cent. Ahmedabad saw rents plunge in malls and main street locations with corrections in the range of 20 to 36 per cent over the last quarter, the survey revealed.
“Even while a correction in rental values is a potential catalyst for retailers to re-enter, receding end user demand has severely curtailed uptake of space,” said Rajneesh Mahajan, executive director, retail s at Cushman & Wakefield India. “The trend of further correction is likely to continue in short to medium term,” he said.
In the first quarter of 2009, 1.4 million square feet of fresh mall supplies was added across seven major cities. The mall supply by end of 2009 is estimated at 17.66 million sq.ft.
NCR witnessed the highest mall supply in the country, at 8 lakh square feet.