By Rakshita Sareen
Vacancy of mall space in Ahmedabad, which has the tag of ‘mall graveyard’, continued to rise in 2018. While supply of mall space increased by almost 40%, absorption levels grew just 2%, data sourced from PropEquity shows. But that is not deterring builders in any way.
Anarock Retail MD & CEO Anuj Kejriwal said more supply is on its way with nearly 1.6 million sq ft of new space expected by 2021. “Despite high rentals of `95 per square feet, supply went up to 1.74 million sq ft in 2018 from 1.26 million sq ft in the previous year,” Kejriwal said.
Among the players that are coming in is Phoenix Mills, which owns and operates malls in Mumbai, Pune, Chennai, and Bangalore. Phoenix has acquired a land parcel of around 5.16 acre in Thaltej for `230 crore and the developer will build premium space of 0.6 million sq ft in the first phase.
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The excitement among developers is because of the fact that many companies now have presence in Ahmedabad, increasingly making it a more cosmopolitan city.
Aditya Shah, CFO, Gulmohar Park Mall, points out that tourists too spend a lot of time in malls apart from doing regular sightseeing. “Many of the earlier malls went bust because developers simply wanted to build and lease out space rather than providing good shopping experience,” Shah points out.
He adds that even today a few malls are struggling to survive because there isn’t enough parking space while the issue for some others is that the location is not exciting enough.
Meanwhile, Pune, also once a retail graveyard, saw a 10% fall in vacancy levels in 2018. Samantak Das, head of research, JLL India, points out that some poorly performing properties such as Pulse Mall on Nagar Road and Nitesh Hub have pulled out. This has pushed the average vacancy rate down. “Both the malls will be converted into office space,” Das said.
Nitesh Hub closed down one million square feet retail space in October 2018 and the property was sold for `407.88 crore to ABIL Group. Despite being housed in the posh locality of Koregaon Park, the mall was closed because the builder needed to repay loans.
While Pune has retail space of around 6.4 million sq ft, the city will see fresh supply of 2.3 million sq ft by 2022, data sourced from Anarock show. However, vacancies could rise. In 2018, 1.56 million sq ft of space was vacant, down from 1.74 million sq ft in 2017. Das believes that increasing rentals — up from `92 per sq ft in 2017 to `95 per sq ft in 2018 — have made Pune an expensive retail destination.