than half the rate seen in early 2010, and the pace of retail sales this financial year is expected to be its weakest in three years.
"Some corrections have happened. Some realities had to be considered," said Tushar Mehta, the director of Amanora Town Centre, a 1.1 million sq-ft mall (102,000 square metres) in the city of Pune, near Mumbai. "Retailers are seeing this as a window to close a deal at a better rate."
The mall, with brands such as Hong Kong fashion chain Esprit Holdings Ltd, U.S. clothing brand Levi's and Britain's department store Marks & Spencer, has renegotiated some leases in recent months at a discount of 5-8 per cent.
MALLS VERSUS HIGH STREET
The chance to lock in cheaper rents has prompted Future Retail Ltd to focus on relocating stores rather than opening new ones.
It has opened only two of its flagship Big Bazaar hypermarkets this year through July, compared with 20 a year earlier. It has, however, relocated several to locations offering more competitive rents.
"There are many good deals available now and it only makes sense to block those spaces up because the economy won't stay this way forever," said C.P. Toshniwal, the group's chief financial officer.
Costa Coffee, a unit of Britain's Whitbread Plc, is finding better deals on high streets than in malls, with prices down 10-15 per cent in the past two to three months, its India managing director, Santhosh Unni, said. He expects rents to keep falling in the next 6-8 months.
Hypermarket chain Spencer's Retail, owned by power utility CESC Ltd, said rental costs have dropped as much as 20 per cent and it has been negotiating for 40 properties ahead of plans to open 80 stores over four years.
"We are hopeful of booking twice the number of deals today than we would normally because the market has become more realistic," said Chief Executive Mohit Kampani.
The bargains may not last long though.
Jones Lang LaSalle's Real Estate Intelligence Service estimates about 20 per cent of retail space is vacant and the gap might increase to 24 per cent in 2014, explaining why landlords are