Rental values are perking up

Written by Monalisa Sen | Updated: Aug 12 2010, 06:21am hrs
The first half of the year 2010 has seen increased retailer interest in the country, according to the India Retail Report of CBRichard Ellis for January- June 2010.National as well as international retailers who were earlier cautious in their approach have started booking space in prime markets across high streets and malls, the report says.

Retailers are becoming more cautious in their approach towards retail space and are more conscious of footfalls, tenant mix and conversion rates before committing to retail space options. The concept of shopping as a whole has altered in terms of format and consumer buying behaviour.

Retailers are more aligned to standards-based architecture and software support to all kinds of mission-critical IT applications for enabling greater efficiency, significant cost savings and newbusiness value.

The focus is on finance and accounting, business intelligence, vendor management, supply chain management, merchandising and inventory management, facilities management, stores management and customer relationship management.

Delhi NCR Key retail real estate markets, like the National Capital Region (NCR), Mumbai, Bangalore and Chennai, witnessed an improvement in average rentals in first half of the year.

NCR rentals in Delhi are moving towards stability after an extended period of correction over the past few quarters. While Grade B markets have observed corrections of 5 10% Grade A retail spaces are close to their pre-recessionary rentals,with a 1015% increase in rental values over the past fewquarters. Retailers are shifting the focus to prime retail space, in spite of the related premium rentals. The past quarter was noteworthy; for it marked the India entry of international apparel giant Zara, with its flagship outlet opening up at Select Citywalk, Saket. The coming months should also see the entry of prominent international brands like Jack&Jones, Forever 21, Diesel, Timberland and Ecko in the city. There has also been a visible trend in the food and beverage B space, with multiple coffee chains and casual diners such as Gloria Jeans, Segafredo Zanetti and Mocha mushrooming across the city. Prime high streets like Khan Market and South Extension continue to hold interest, with the launch of several local eateries, apparel players and electronics giants like Mamagoto, Accessorise, Editions, Daniel Hechter and Croma.


The Mumbai retail market has seen a slow recovery after the slowdown of 2009 as the latter half of the year saw two prominent projects being launched; Palladium at High Street Phoenix and R City Centre (Phase 1), though these projects reached 80% occupancy levels only in Q1 2010. Palladium is positioned as premiummall and boasts of prominent global brandsmaking their debut inMumbai. These brands include Zara, The Comedy Store, Bo Concept, Burberry, Hugo Boss, Canali, Diesel, Sunglass Hut,DKNY, CKand Manchester United Caf & Bar among others. R City Centre is one of the largest organised developments Mumbai city has experienced.

The traditional high street destination of Mumbai-Linking Roadwitnessed the opening of a number of new stores such as CK, FCUK, Adidas Essentials, Guru and Maple Technologies.

The rental trend for high streets remains constant as there was limited new supply/churn in the traditional markets of Linking Road & Colaba and with the increased activity and enquiries rentals have increased substantially especially on Linking Road, approximately 7 lakh sq.ft. of organised GradeAsupply is expected by the end of this year.


The momentum from the end of 2009 continues in 2010 with high streets leading the way for retailers expansion. Main markets like Indiranagar 100 Feet Road, Jayanagar 11th Main, Jayanagar 9th Block and BEL Road apart from the CBD locations like Commercial Street, Brigade Road, Lavelle Road, Vittal Mallya Road andMGRoad have continued to be on the main target list of retailers expanding as well as newentrants into the market.

F&B players continue to be the premier among the retail formats expanding with Yum! Brands and McDonalds right at the front apart from other international players like TGIF, Costa Coffee, Cafe Pascucci, Brand Calculus, etc. Local and regional fine dining chains like Umerkot, Ping, Via Milano, etc have also been on the expansion trail with many of them spreading their reach in premier locations.

On the organised retail front, Royal Meenakshi Mall on Bannerghatta Road seems to be the project that has caught everyones interest.

The development is expected to be handed over for fit outs by August SoulSpace SPIRIT on Outer Ring Road which has central as the main anchor and Cinemax as the multiplex operator is expected to open by the year end while all the other developments under construction which were to open in Q4, 2010 or Q1, 2011 like Inorbit Mall, Orion Mall, Market City and Park Square Mall are at least 12 to 18 months away.

The Collection at UB City has wit-nessed a new change and Diesel has opened their third location in the country with an approximate size of 5,000 sq.ft while the opulence of brands like Jimmy Choo, Bottega Veneta and Etro will be available to its avant garde customer within a fewmonths time.

The year 2010 continues to witness a stable market with most locations maintaining similar rentals to the latter half of last year.


In the last year the city has witnessed one mall Ampa Skywalk coming into operation and around 6 malls under construction which would become operational over the next 2 years. Amongst the upcoming malls, Express Avenue a CBD mall which is of 0.7 million sq.ft. is one of the most anticipated launches, considering its location and the retail mix; this mall is partially operational with a handful of stores and will be completely operational by Q3, 2010. Other large retail developments include Phoenix market city which is a 1 million sq.ft. integrated development located at Velachery and Junction mall which is about 0.8 million sq.ft. located at Old Mahabalipuram Road (IT Corridor).

Over the past year, the perceived slump in the retail sector has led to retailers renegotiating the existing contracts in the organised retail sector.

The market has witnessed a correction in the rentals both in shopping malls and high streets. The organised retail market in Chennai is in a very nascent stage. The year 2010 is anticipated to be a revival year with 2 new shopping malls expected to be operational. The much awaited Express Avenue which is partially operational and is expected to be a bridge to the citys new shopping experience. Chennai is going to witness a big size shopping experience in the next two years, says the India Retail Report of 12 CB Richard Ellis.