Developers shelve plans for new ones; some let out mall space for commercial use* The Kohinoor group which had planned a six-storey mall as part of its Kohinoor City at Kurla has now decided to go in for a less ambitious two-storey one. The group has decided to instead increase the commercial component of the project. * Even a strategic location bang opposite Santacruz station couldn’t help bail out the Hi-life mall which failed to get retailers for the top three floors of the five-storeyed mall. After six months, these floors are now being let out as office space after retaining the retail outlets on the first two floors. * The swanky two lakh sq ft Atria mall at Worli has a high vacancy rate of more than 24%, the average vacancy rate in malls usually being 5%. The glut caused by the burgeoning number of malls in the city has led to several developers shelving their plans for malls and instead going in for office spaces. A few have been compelled to lease out part of their already constructed mall complex to offices after they found no takers amongst retailers. To make matter worse, at a time when the economic slowdown has caused retailers to go slow on their expansion plans, 1.7 million sq ft of supply is near completion in Mumbai and is expected to enter the market over the coming few months. According to Pankaj Kapoor, CEO of the real estate research and analyses agency Liases Foras, Mumbai’s real estate has an oversupply scenario in the retail sector with 125 malls in the city including the under construction ones. “Retailers are cost-sensitive and with inflation the profit margin of retail companies has gone down. The same is true for consumer affordability. DLF and India Bulls were the first to do away with their plans for malls or reduce the area for the same at their under construction projects at Lower Parel.” “Let alone the price factor, we were not getting any retailers in our project Hi-life at Santacruz. As developers we have to finish a project and move on to the next one. Instead of waiting for two years, we took a call to let out our mall for commercial use and we immediately found takers for one entire floor,” said Mukesh Patel from Neelkanth group. Another upcoming mall at Prabhadevi as well as a newly constructed mall at Bhuleshwar are amongst the ones to join the commercial bandwagon. Property analyst point that that a successful mall in central Mumbai has been witnessing their retail tenants periodically changing while another one in Malad has been of late seeing lower footfalls than before after the opening of a new mall in the nearby suburbs. Besides the slump, analysts state that in many cases the decision to convert upcoming malls projects into commercial has been fuelled by a September 2008 state government notification allowing IT parks to utilize 80% of the total constructed area for financial services and banks. IT parks that are allowed to build double the area allowed for normal buildings were initially allowed to let out only 30% of its space for activities other than IT and IT enabled services. Developer Vimal Shah, who had earlier announced plans for Akruti city mall at Andheri is amongst the many who will now construct a commercial project in place of the mall. Shah states that one reason for his choice is that in India anchor stores (the chief attraction at a mall meant to draw customers) offer very low rents. “It is so low that to make up for it the other retail stores in the mall are charged heavy rents. This makes it difficult for them to remain in the malls for long,” said Shah.
