Mall deliveries: Delhi-NCR scripts revivalhttps://indianexpress.com/article/business/business-others/mall-deliveries-delhi-ncr-scripts-revival/

Mall deliveries: Delhi-NCR scripts revival

While the proportion of vacant malls have seen a rise except for Pune and Kolkata, developers plan to offer 34 more in key cities over the next 2 years.

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While several malls across the country closed down over the last year as they found it tough to survive, there are many more who are living on the edge.

The retailing industry within the country has been in a fix on account of high rentals, decline in footfalls & sales and competition from e-commerce players forcing them to offer higher discounts to their customers.

The problem however, does not stop at them and the stress has also trickled down to the mall owners who have been forced by retailers to bring down the rentals which has resulted into a decline in their revenues and thereby raising a question mark even on their survival.

While several malls across the country closed down over the last year as they found it tough to survive, there are many more who are living on the edge.

However, that does not seem to be enough reason to stop new ones from coming up as many more are set to come up over the next three years to capitalise on the rise in consumerism across the country. According to the report on retail sector released by Cushman & Wakefield, while only one mall (in Bangalore) was added across the eight cities in the first quarter of the calendar 2015, 30 more are set to come up by the end of this year and 64 will come up by 2018 as they are in various stages of completion.

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Delhi-NCR is set lead with addition of 11 malls by the end of this year and Bangalore will see seven more malls coming up by the end of this calendar.

The strong pipeline comes even as the sector witnessed rise in the mall vacancy over the last one year. The report shows that while the mall vacancy stood at 14.55 per cent across eight cities in the first quarter of 2014, it rose to 14.7 per cent in the quarter ended March 2015. Though Pune did well and witnessed a decline in mall vacancies from 27.5 per cent in March 2014 to 20.7 per cent in March 2015, Mumbai, Delhi-NCR and Bangalore markets saw a rise in mall vacancies.

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Real estate experts feel that a lot of retailers are under stress from the e-commerce players andare finding it tough to operate from expensive real estate–malls.

“A lot of retailers are making an exit from malls or are looking to renegotiate the rentals with the mall owners. While the rentals have already been putting pressure on them, the competition from e-commerce is forcing them to go for higher discounts thereby putting pressure on their margins and limiting their ability to operate from expensive real estate,” said Sandeep Singh Katiyar, CEO, Century 21 Real Estate, India.

Though the pressures continue and only few malls, which have been maintained well and have strong retail brands operating within, are doing well, the report says that Delhi NCR market will see 27 malls coming up over by 2018. This will account for 42 per cent of the total number of 64 malls set to come by 2018. While 11 will come up by the end of this calendar, the remaining 16 will come between 2016 and 2018.

Even on the supply front over the next three years Delhi NCR seems to be the most active market as it will account for almost half of the total supply coming up by 2018 in retail space. The 27 malls will account for a supply of 7.67 million sq ft (msf) and it is almost half of the total 15.77 msf retail supply set to come up by 2018 across the eight cities.

Mumbai will see only one more mall addition this calendar and one more in the period between 2016 and 2018.

Among the southern cities, while Bangalore is witnessing a lot of action this year, Hyderabad and Chennai are expected to see eight and five malls, respectively, get completed between 2016 and 2018.

While new malls are coming up, there is a feeling that even the upcoming malls may see a change in the way they come up. Experts say that a lot of them may not come in their traditional form but may come on the hybrid concept — mall and high street shopping. “There is need and appetite for malls as people go out on weekends. However malls on the hybrid concept have been doing well and a number of new ones may come up on that concept. They have a lot of open space and their maintenance cost is also low for the owners,” said Katiyar.

There is also a view that a number of the new malls coming up now, is a result of the big existing pipeline. While a number of developers deferred their projects as theirs was a slow take-off of retail space, most of them will come up over the next few years.

“The retail market is expected to see steady growth over the next few quarters albeit at a slower pace. Given that retail space takes a significant time to get developed and subsequently leased may be dissuading developers from taking up extensive projects, which is why increasing number of mall space are deferred over a period of time,” said Sanjay Dutt, executive MD, South Asia, Cushman & Wakefield.

The report pointed that two planned mall spaces — one each in Kolkata and Pune —with a total of 5,00,000 sf, that were expected to come into supply in Q12015 were deferred for later in the year. They are now expected to be completed by the third quarter of this year.

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“Whilst shortage of skilled labour, primarily for the final stages, resulted in slower pace of construction for the mall in Kolkata, delays in obtaining licenses delayed the infusion of new supply in Pune,” said the report.

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