1. 11 msf of new mall supply expected in 2017: Cushman & Wakefield

11 msf of new mall supply expected in 2017: Cushman & Wakefield

The year 2016 was one of the best years for the organized retail sector with supply of new malls touching a five-year high of 5.3 million square feet (msf) across the top eight cities during the year, notes international property consultants Cushman & Wakefield.

By: | New Delhi | Updated: January 5, 2017 5:19 PM
blackstone-l-represtative-pti Pune witnessed three malls becoming operational, spanning a total of 0.8 msf during the year. (Representative image: PTI)

The year 2016 was one of the best years for the organized retail sector with supply of new malls touching a five-year high of 5.3 million square feet (msf) across the top eight cities during the year, notes international property consultants Cushman & Wakefield.

The highest supply of malls was noted in Delhi-NCR with over 3.1 msf of new mall supply, followed by Mumbai (0.9 msf) and Pune (0.8 msf). Owing to completion of the ‘Mall of India’, which is one of the largest malls in India, Delhi NCR accounted for almost 60% of the share in new supply during the year.

Pune witnessed three malls becoming operational, spanning a total of 0.8 msf during the year. Stable economic conditions and growth along with changes in disposable incomes, have led to larger per head spending in the last few years. This led to retailers targeting these cities for their presence, thus spiralling demand for retail space.

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Anshul Jain, Managing Director, India, Cushman & Wakefield, said, “While there is a short-term set back in actual spending caused due to demonetization, we expect consumer spending to pick up pace in the longer run, led by stabilization in the economy, increasing acceptability of ecommerce and increased liquidity due to implementation of the Seventh Pay Commission, amongst other factors. This reflects the rising disposable incomes of Indian consumers, providing a vast potential for international as well as domestic retailers for expansion. Further, implementation of the Goods and Services Tax (GST) will bring in greater operational efficiencies in supply chain management and managing costs for international retailers who will be able to implement their global best practices more seamlessly in the country.”

According to Anshul, “Retail mall spaces have, in recent times, seen interest from institutional investors which is providing an additional boost to developers to take up retail malls space building. Further, once India also starts listing REITs, quality retail spaces will be seen as a viable mid to long term investment asset for investors. This has further enhanced the attractiveness of retail mall spaces for developers. This is perhaps the reason why 2017 is expected to see nearly double the amount of retail space as against 2016.

MALL SUPPLY TO GAIN MOMENTUM IN 2017

The current pipeline of mall supply for 2017 looks strong with approximately 11 msf of mall supply expected to become operational across the eight cities. Hyderabad, which is among the least-penetrated markets, will likely witness the highest supply of malls during the year. Spanning 2.6 msf, eight malls are likely to become operational in Hyderabad during 2017. While these malls would be spread across the city, majority of the malls would be seen in the north-west quadrant in locations such as Kondapur, Gachibowli and Chandanagar.

Following closely on the heels of Hyderabad is Chennai that is likely to see supply of 2.5 msf during 2017, spanning across five malls. Interestingly, the city is likely to witness the first bout of significant supply since 2013. While most of the supply is likely to be in seen in peripheral locations such as Vandalur, Navalur, two of the malls will become operational in Velachery during the year.

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Mumbai, which has seen a sluggish supply of malls over the last few years, is also expected to see supply of 2.3 msf across three malls. A mall each is expected to come up in Navi Mumbai, Mulund and Bandra-Kurla Complex during the year catering to different parts of the city. Bengaluru too is likely to witness a frenzied supply with 2.0 msf of mall space expected to become operational during the year across five malls spread across submarkets such as Whitefield, Vijaynagar, Yelahanka, Bannerghatta Road and Koramangala.

Owing to the current oversupply of malls in Delhi-NCR, developers are likely to rationalize upcoming supply, with the city likely to witness only 0.2 msf of supply this year.

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