While the residential realty market in Mumbai claims to be gradually recovering,the retail realty market is still reeling under the impact of the global slowdown.
As against an aggressive increase in availability of mall space over the last few years,the last three months have not had a single new mall being added to the existing stock in Mumbai. According to a second quarter review of the retail real estate market by Cushman and Wakefield,about 8 lakh sq ft of mall space that was to be released in this period,was deferred to the latter half of the year. Another 25 lakh sq ft earlier planned was completely withdrawn.
Rental rates in high streets too have been nosediving over the three months from April to June 2009. Kemps Corner-Breach Candy in Mumbai witnessed one of the steepest corrections in the country,as the rentals fell by 24 per cent in just three months. Similarly,Fort area registered a drop of 18 per cent,Linking Road in Bandra and Lokhandwala in Andheri saw a nine per cent decline while Colaba Causeway had a five per cent fall in rentals in the second quarter of this year.
Jaideep Wahi,Director,Retail Services at Cushman and Wakefield said the established high streets had touched very high price points until a year ago and the price correction across micro-markets has helped rationalise prices here. This is visible in high streets such as Breach Candy,Colaba Causeway and Linking Road,each of which has seen a cumulative 60 per cent drop in rentals over the last one year. About the subdued scene in mall space,Wahi added,The expected supply has been greatly reduced since the beginning of the year owing to reasons such as slowdown in construction and in certain cases,complete withdrawal of projects.
Amongst malls,the sharpest decrease in rentals has been at Goregaon,which until July 2008 had remained immune to the price correction that had hit every other micro-market in Mumbai. In the last one year,rentals in the newly inaugurated malls at Goregaon fell by more than half. Malls at Lower Parel,Vashi and Mulund too have seen their rentals fall by a third in this period.
Wahi added that renegotiations between retailers and owners will lead to further corrections. Instead of the usual fixed rental model,retailers are looking at changing their business understanding with upcoming malls into a revenue share or minimum guarantee model, he said.