As a result of the retail sector being hit hard due to economic meltdown,the number of mall projects completed last year has become less than half of what was expected. Of the 4.3 million sq. ft of space expected in 2008,Mumbai saw only 2 million sq ft of mall supply by end of the year.
A report by Cushman and Wakefield stated that of the 12 malls that were supposed to enter the market last year,only seven have been completed in the Mumbai Metropolitan Region. These include Raghuleela Mall at Vashi,Metro at Kalyan,Oberoi mall at Goregaon,Little World mall at Kharghar,Inorbit at Vashi,Grand Galleria at Pheonix in Lower Parel and Crystal Point at Andheri. Several mall projects including those by Runwal group in Thane and Ghatkopar,Kalpataru group in Thane,Palladium Mall in the Phoenix Mills compound and mall by India Bulls at Lower Parel have either not seen the light of the day or are yet to be operational.
The average vacancy rate in the Mumbais malls has been a high 10 per cent last year. Over the last three months mall rentals have softened.
According to Rajneesh Mahajan,director of retail services at Cushman and Wakefield,increasing demand of retail real estate in the first half of 2008 pushed rental values in Mumbai,making it one of the highest in Asia.
Due to economic slowdown,retailers gradually began resizing stores,renegotiating on rentals and even exiting from locations where operations became unviable. The impact has been felt at Lower Parel which saw a 31 per cent fall in mall rentals over the last three months. The report stated that the vacancy rates in malls had been aggravated further as retailers prefer premium high streets over malls. Nonetheless even high streets have not been spared the effect of the slowdown.
Linking Road which used to be the most coveted and expensive high street in Mumbai has 44 per cent less vacancy than last year followed by the plush Breach Candy or Kemps Corner which has 41 per cent less occupancy as compared to last year. The rentals at both places have dropped by 31 per cent and 26 per cent respectively in the last three months.
Retailers with multiple brands may go in for efficiency in operation by consolidating all their brands under a single roof. By and large they will mark their presence on high streets rather than in malls although with budgetary constraints, said Mahajan.
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