New Delhi, September 05, 2018: The Indian retail real estate market was marked by continuous entry of international brands, launch of retail developments and sustained demand for space in the first half of 2018. India’s top seven cities witnessed an addition of about 1.9 million sq ft of fresh supply led by Chennai, Hyderabad and the National Capital Region (NCR), showed CBRE South Asia report.
However, the supply is down 5% from a year ago and that has helped rentals maintain an uptrend. There was an uptick in rental growth not only across a few malls in NCR and Bengaluru, but also high street locations such as Jayanagar and Commercial Street in Bengaluru and Linking Road in Mumbai.
According to reports published in economictimes.indiatimes.com the review period witnessed the launch of 1-million-sq-ft VR Mall in Chennai, L&T Hyderabad Next and L&T Next Galleria totaling 650,000 sq ft in Hyderabad, and 32nd Avenue with 250,000 sq ft space in Gurgaon.
“The overall outlook for the Indian retail real estate market continues to be positive at the back of various policy reforms, entry of foreign players and increasing urbanisation.
With REITs in the offing, the focus on developing investment grade developments is likely to redefine the retail segment in India,” said Anshuman Magazine, chairman, India &South East Asia, CBRE.
International as well as domestic retail players were active in the leasing space during the period. Several local and global brands not only entered new markets but also strengthened their presence in existing markets and the trend is expected to continue.
According to reports published by Kailash Babar, Sobia Khan,we continue to receive new enquiries for brands across our malls during the first half of the year even though the leased occupancy across Phoenix Malls is close to 100%. We expect to be able to accommodate many of the new brands entering India or expanding their footprint in the country,” said Shishir Shrivastava, Joint MD, of retail-led mixed-use property developer Phoenix MillsNSE 2.94 %.
Even homegrown departmental store chains such as Shoppers StopNSE -4.45 %, Central, Lifestyle, Max and Pantaloons were in an expansionary mode. Rising consumer base and increasing spending potential even in Tier-II cities have generated an opportunity for many retailers that are making a beeline towards several Tier-II cities.
Magazine expects an addition of close to around 4-5 million sq ft of supply during the second half of this year across most major cities such as NCR, Mumbai, Bengaluru, Chennai and Hyderabad according to economictimes.indiatimes.com
Interestingly, landlords are adopting shorter lease terms of 5-6 years as opposed to the 9-year lease term in the past in order to maintain a dynamic tenant mix and remain competitive in the current environment.
According to CBRE, a nominal decline in supply was witnessed as a few completions were deferred and they are expected to become operational over the next few months.