HYDERABAD: Despite improvement in residential and commercial sectors of the real estate industry, the city’s retail sector continues to move at a snail’s pace, showing little signs of growth in the first quarter.
According to a report by property consultants Cushman & Wakefield, mall vacancy in Hyderabad remained unchanged at 7.3 per cent as modest availability of quality spaces kept transactions limited. Reduced footfalls were noticed in select malls in Banjara Hills and Himayathnagar and overall mall leasing remained poor in the city.
The report revealed that whilst new mall supply admeasuring 150,000 sq ft was completed, the opening of the mall was delayed to later periods as tenant fit-outs are still underway.
On the other hand, mall rentals remained stable in the wake of low churn and unwavering vacancy. Whilst leasing remained low in malls, demand for main street retail remained healthy from apparels and Food and Beverage (F&B) segments, the report stated.
As far as significant leasing activity in the main streets is concerned, the report stated that the limited availability of quality spaces in malls led to healthy leasing activity in main streets such as Kukatpally, Jubilee Hills and Chandanagar, which witnessed new leasing activity during this quarter.
Nationally, the first quarter of 2015 (Q1 2015) witnessed the addition of one shopping mall to the overall mall inventory across the top eight cities in India. While Q1 2015 witnessed new supply of 200,000 sf in Bengaluru, it is estimated that currently 30.49 msf of mall space is under construction across the top cities projected for completion over phases by end of 2018.
Of the total estimated ‘under construction’ mall space, 48 per cent, i.e, 14.72 msf (spread across 30 malls) is expected to become operational by end of this year with Delhi-NCR (11 malls) and Bengaluru (7 malls) witnessing the highest concentration of new mall spaces.
The retail market is expected to see steady growth over the next few quarters albeit at a slower pace. Given that retail space takes a significant time to get developed and subsequently leased may be dissuading developers from taking up extensive projects, which is why increasing number of mall space are deferred over a period of time.
‘’Restructuring of debt and reassessment of development plans are rife with developers who have previously announced their retail space plans, thereby shrouding the future of many expected mall space in doubt. However, for investors, this scenario may actually present a good opportunity to invest and build a large retail portfolio for themselves,” said Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.