With vacancy levels in its malls hitting 27%, Pune could be the next graveyard in India for retailers and developers after Ahmedabad. Retailers are being compelled to scale back as consumer spends slow down and as a result mall space is going a-begging. Although the situation isn’t as bad as it is in Ahmedabad — where vacancy levels have crossed 30% on average — it’s clear developers have been overzealous. Over the last two years, four malls — Phoenix MarketCity, Amanora Town Centre, Koregaon Park Plaza and Seasons Mall, with space of close to 6 million square feet — were opened. These are now lying half empty as big brands find footfalls are dropping. Already, the Tata Group's Croma chain of electronic stores, RP-Sanjiv Goenka's Spencer's chain of supermarkets and Shoppers Stop have started to pull out stores from the city’s malls.
“Pune is an example of an oversupply of malls disproportionate to the consumption capacity,” said Kishore Bhatija, CEO, Inorbit Malls, owned by K Raheja Corporation, whose Inorbit mall came up in Pune in 2011.
Vacancies in some malls are way above the average. The 2,00,000 square feet Nucleus Mall in the Camp area, for instance, is 60% empty. Shoppers Stop, one of the anchor tenants at the mall, recently closed one departmental store and one Mothercare store, adding to a string of exits over the past year.
More than half of Seasons Mall, which opened in August this year, is lying empty, said Anand Sundaram, CEO, Pioneer Property Zone, a mall management company. The mall is spread across 1.5 million square feet and was developed by Magarpatta Retail with an initial investment of Rs 450 crore.
Ishanya Mall in the Yerwada area, promoted by Deepak Fertilisers and Petrochemicals, is almost 40% empty. Spread across 5,50,000 square feet, the mall was originally a home furnishings and speciality design centre in 2007 set up at an investment of R110 crore. The oversupply means developers will take longer to break even on their investments.
“The mall has been incurring losses due to a larger break-even period associated with the operations of the mall, which is extended due to continuing adverse economic environment since the launch of the mall in 2007-08,” Deepak Fertilisers said in its latest annual report.
“Typically, its takes about a year for a shopping mall to stabilise, but in the case of Pune it will take