Amidst inflationary trends, major metros have started witnessing a dip in rental property prices between 20% to 40% for retail and commercial, nationally. According to Anshul Jain, CEO India, DTZ, ?The correction in rental prices will give a breather to retail companies. This will help the retailers achieve expected margins. Coprorates can now shift to new premises at favourable rates, making them financially stronger.?
If the rental prices would not have sky rocketed the way they did in the last two years, one would have seen more rental price correction now, he said. ?However, this is not a good news for mall developers as their return on investment (RoI) will diminish,? Jain added.
According to Tarun Joshi, CEO, Brandhouse Retail, ?Despite the current market scenario, we hope that a drop in rentals will spur growth in luxury retail. This is because consumers continue to spend on apparels and accessories, on which we hope to cash in on. Consumers may put decision on buying a second car on hold for a year, but demand for apparels is now a priority for them, especially in view of Diwali.?
According to Jai Mavani, executive director, KPMG India, the real estate market is due for correction and the move is all set to bring in good news to retailers who have been facing a squeeze in margins and high rental prices. ?Retail is not just dependent on real estate alone, but also on the traditional consumption-led pattern that India follows. Hence, in India, more retail penetration will lead to a growth in supply of retail properties on lease rental basis,? Mavani said.
After setting up Eternity Mall in Thane in Mumbai, Kanakia Spaces is in the process of setting up its third Eternity Mall in Lucknow. Its vice president, Subhash Pillai told FE, ?We will now see base of more number of anchor tenants. Also, it’s good news for customers as they will have a variety of branded products to choose from.?
Ashish Bhalla, managing director, Millennium Spire Ltd (a private equity investment company) said, ?Rental value is 4% of the capital value. Supply of rental properties is likely to grow, the effect of which will be felt in the next few months.?
