Sealing sends rentals skywards
Sealings propel an unprecedented leap in retail space rent, report Aasheesh Sharma and Moushumi Das Gupta.india Updated: Nov 25, 2006 02:10 IST
It is a boom you may have heard of, but in this season of sealing, it has got louder than ever before. Retail property prices in Delhi and its suburbs have risen to unprecedented heights, much of it due to the sealing drive on shops in residential areas.
With many traders contemplating relocation, prices have gone up by as much as 100 per cent over the past one year, say real-estate firms. “The scarcity of alternative retail locations and the growing demand for premium locations have led to prices rising by about 60 per cent and, in some cases, 100 per cent over the past one year,” says Sanjay Verma, joint managing director, Cushman & Wakefield India.
He adds that in the past fortnight, ever since the sealing exercise resumed, there has been an increase of about 10 per cent in prices.
Agrees Anshuman Magazine, the South Asia managing director of CB Richard Ellis, a real-estate consulting firm: “There is an acute shortage of commercial space. The sealing drive has made it worse.”
The demand is such that even the Delhi Development Authority (DDA) markets which till a few months ago were not finding any takers, mainly because the rates were too high, are being bought at twice the earlier price sought.
Take the Janakpuri District Centre in west Delhi for instance. Till last year, about 20 per cent of the shops and office space areas at the centre was lying unutilised. The reason was the price tag of Rs 25 lakh per shop of 100 square feet area. Shopkeepers preferred taking shops in residential colonies on rent for a fraction of that price.
In the past seven months, there has been a mad rush to buy the same shops — for double the price. "Eight months ago, I was being offered Rs 20-25 lakh for a shop at the district centre. Now I am getting offers of Rs 50-55 lakh for the same shop," says RK Nagpal, a property dealer who has an office in Kirtishekhar Tower at the district centre.
The rents for commercial space too have skyrocketed. With its flagship store in South Extension sealed, retailer Big Jo’s acquired a showroom in Greater Kailash’s M block market last year.
"The appreciation in rentals in this market has been to the tune of 150 per cent," claims Big Jo’s managing director Sanjiv Jain.
CTC Plaza proprietor Vipin Chhabra says, "There has been a 35 per cent appreciation in prices in Gurgaon malls." CTC Plaza, which moved the Supreme Court earlier this week against the sealing of its Ashram showroom, has plans for a 24,000 square feet showroom in Gurgaon’s DLF City.
Many smaller retailers simply do not have the luxury of moving to another outlet. RK Sachdev’s readymade garments shop in Lajpat Nagar was sealed last fortnight. "My 900 square feet shop generated a turnover of Rs 1.5 crore every year. I thought of moving to Sarojini Nagar, but a shop of a similar size there would cost me at least Rs 10 crore," says Sachdev. “Even the rent would be in the range of Rs 3-4 lakh. I just do not know where to go now."
So who is to be blamed for the space crunch that has led to the big boom? Minister of State for Urban Development Ajay Maken holds the DDA responsible for not providing enough space. According to a report prepared by the Housing and Urban Development Corporation (HUDCO), only 13 out of the proposed 29 district centres have been completed till date. "In all 29 centres, the total floor area to be constructed was about 96 lakh square metre. Till date only 15.3 lakh square metre seems to have been made available in 10 DCs," says the report, submitted to the Urban Development Ministry.
Email Aasheesh Sharma: firstname.lastname@example.org
Email Moushumi Das Gupta: moushumi.gupta@hindustantimes